AUDUSD bounced back after approaching the May 2022 low at 0.6828 after a big fall due to the strengthening of the USD in June where it slipped from a high of 0.7280 to a low of 0.6850. This was due to market projections and speculation about the aggressive rise of the FOMC rate (where the FED eventually raised the rate by 0.75%). But now AUDUSD is breathing again as post-FOMC profit-taking activity boosted AUDUSD to 0.7070 and is now trading relatively stable around 0.6970. To confirm the formation of a double bottom on the daily chart, AUDUSD should close above the neckline at 0.7280 and if this happens, then AUDUSD could be seen to strengthen again.
In today’s Asian session, the publication of the minutes of the rather hawkish RBA policy meeting gave some relief as the AUD continued to rise from lows. The RBA expects Australia’s inflation rate to hit 7% in the December quarter of this year and interest rates are expected to be at 2.5%. RBA Governor Philip Lowe was quoted as saying that:
“The RBA is confident that inflation will return to the RBA’s projected level of 2-3% in 2023 after the post-pandemic supply issue is resolved and the aggressive action of all the world’s major central banks in tightening their monetary policy controls.”
Although AUDUSD is seen to be safe from hitting new lows for 2022, it is still vulnerable to external factors that are likely to push the AUD lower, such as the fall in iron ore prices, which have fallen around 20% from April highs. Uncertainty in China’s real estate industry and Covid China’s zero Covid policy that stifled economic growth are expected to continue to weigh on iron ore weakness.
Click here to access our Economic Calendar
Tunku Ishak
Technical Analyst – HF Education Office Malaysia
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.
