Price Analysis

Weekly AUD/USD Overview: Bearish Breakthrough Due To Monetary Authorities’ Imbalances

The AUD/USD pair dipped to 0.7129 on Friday before recovering to 0.7150. While the Australian macroeconomic timeline stayed empty this week, the US macroeconomic timeline supplied some fascinating insights on the status of the nation’s economy.

Inconsistencies In Monetary Authorities

The FOMC issued its December meeting notes on Wednesday, spooking the markets by stating that rising inflation and a tightening labor market weakened financial support. Most participants said prerequisites for a rate increase could be satisfied shortly, supporting a March rise.

Finally, Fed policymakers began talking about selling bonds in the coming months. There is around $8.3 trillion in Treasury and MBS on the national financial statement.

According to the statement, “nearly all members agreed that it would indeed be acceptable to start the financial statement runoff after the first jump in the target band for the federal funds rate.”

For most of 2021, US officials worked to calm inflation fears by removing the word “transitory” from price pressure descriptions. The Minutes show they are significantly more concerned than they claim and willing to take more harsh actions to restore order.

The Reserve Bank of Australia, on the other hand, believes that inflation will eventually return to reasonable levels. Australian authorities say a rate rise is unlikely until 2024. Due to central bank distortions, the AUD/USD is likely to fall.

Economic Growth Slows

Recent data indicated a slowdown in economic growth in the last month of 2021, worsened by the development of the Omicron coronavirus strain. The record COVID- 19 cases are causing worldwide economic disruption, and the money system may soon suffer.

In December, the US added 199K jobs, half of the market expected. However, the unemployment rate fell more than expected to 3.9%. The results didn’t wow, but market participants thought they were good enough for the Fed.

Only the industrial index was revised in the December Australian Commonwealth Bank PMIs. The US’s official ISM PMIs for the same month fell considerably from prior levels, although they remained in a growth zone.

The Australian macroeconomic timeline will be busy in the days ahead. Also, November retail sales and trade balances will be released.

This month’s CPI and retail sales are expected to rise by a modest 0.3%. It will also issue its January Michigan Consumer Sentiment Index preliminary estimate.

Outlook For AUD/USD

AUD/USD CHART Source: Tradingview.com

The AUD/USD exchange is down 0.7276 for the week. The pair hit 0.7275, a Fibonacci resistance level, several times in the previous and current weeks, indicating it may soon resume its slump and hit the December 2021 bottom of 0.6992.

The duo has withdrawn from an aimless 20 SMA on the weekly chart and is now grappling with an aimless 200 SMA. Less bearish indications have receded from their midlines.

Less than a quarter of a percent retracement of the 0.75555/0.6992 fall, the danger is to the negative. The pair is trading below its moving averages, and technical indicators are neutral.

The weekly low is 0.6992, and a breach below it exposes the 0.6900 figure. Sellers are anticipated to return around 0.7575 and 0.7205.

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