Australian Dollar, AUD/USD, RBA, China Caixin PMI, Crude Oil, Gold - Talking Points
- The Australian Dollar failed to capitalise on a lift in market sentiment
- China – US relations continue to improve while Caixin PMI added to the positivity
- Equity markets have been invigorated to start the week. Will it elevate AUD/USD?
The Australian Dollar found firmer footing before retreating today with growth-orientated assets generally moving higher to start the week.
Australian building approvals for May rose by a whopping 20.6% month-on-month, well above the 3.0% anticipated and -8.1% prior.
Interest rate markets are placing a low probability of a hike from the RBA tomorrow, but these numbers could spice up the monetary policy meeting. The Aussie Dollar bumped higher on the news but struggled to run on with it.
APAC equities are a sea of green, following on from Wall Street’s solid gain seen on Friday. Some positive economic news out of North America gave markets the boost ahead of a holiday-impacted start to the week there.
Today, China’s Caixin PMI manufacturing data also added to the uptick in mood, coming in at 50.5 rather than the 50.0 forecast.
Washington announced that US Treasury Secretary Janet Yellen will visit China this week in further signs of a potential thawing in the sometimes-frosty relationship between the two largest economies.
Crude oil has had a quiet session as it continues to recover from a test lower last week. The WTI futures contract is near US$ 70.50 bbl while the Brent contract is a touch above US$ 75 bbl.
Likewise, spot gold has barely moved as it trades near US$ 1,920 at the time of going to print. Higher Treasury yields seen on Friday might undermine the precious metal if they continue north.
Looking ahead, a series of European PMIs could hold the market’s attention ahead of US ISM manufacturing figures. The full economic calendar can be viewed here.
AUD/USD TECHNICAL ANALYSIS
AUD/USD remains range-bound today after failing to penetrate breakpoint support levels toward the end of last week.
Those levels at .6574 and 0.6565 might continue to provide support ahead of the late May low of 0.6458.
Further down, support may lie at the prior low of 0.6387 and the nearby Fibonacci level of 0.6381. The latter is the 78.6% Fibonacci Retracement of the move from the low of 0.6170 to the peak of 0.7158.
On the topside, resistance could be at a potential breakpoint resistance zone in the 0.6800 – 0.6820 area.
Further up, resistance could be at the previous peaks of 0.7011 and 0.7030 ahead of a cluster zone in the 0.0.7137 – 0.7157 area.
--- Written by Daniel McCarthy, Strategist for DailyFX.com
Please contact Daniel via @DanMcCarthyFX on Twitter
