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Australian dollar eyes BRICS top after mixed PMI data -by Ecork

Australian Dollar, AUD/USD, Federal Reserve, Bond Yields, BRICS – Talking Points

  • The Australian dollar is falling against the US dollar as markets turn risk-averse
  • The BRICS 2022 summit is scheduled to kick off today in a virtual format
  • AUD/USD looks set for further weakness above major trendline support

Asia Pacific forecast Thursday

Asia Pacific markets may be lower today after traders turned off risk during the New York trading session. Recession fears are back in the fold after Federal Reserve Chairman Jerome Powell made clear that raising interest rates could trigger a recession. Speaking before Congress, Mr. Powell said:And the “This is definitely a possibility.” US stock indices responded by paring early gains and ending the day with losses. The risk-sensitive Australian dollar fell against the US dollar. This morning, the global flash manufacturing PMI was released in Australia It rose to 55.8 in June, up from 55.7 in May, according to S&P Global. The services sector component fell to 52.6 from 53.2.

was the euro, And the not the dollarwhich – which They took advantage of the risk aversion flows in the currency market. Dollar strength was stifled by strong bond buying across the short end of the Treasury curve, with yields Fall widely across maturity periods too. Treasury for 5 years sensitive to the US dollar modified It fell to its lowest level since June 10. Bond investors’ appetite extended across the bond markets in the Asia-Pacific region, with government bond yields lower in Australia and New Zealand.

Energy markets have been another victim of growing confidence in the impending recession. West Texas Intermediate crude prices are down about 4% to their lowest traded levels since early May. The Fed’s indications of the possibility of a recession benefit its policy in this regard, as lower oil prices are likely to help cool inflationary pressures. President Joe Biden has called on Congress to suspend the federal gasoline tax through September. The US president is under mounting political pressure with gasoline prices at or near record levels in most parts of the United States.

Elsewhere, the BRICS summit is set to take off in its default form. The leaders of Brazil, Russia, India, China and South Africa will discuss economic and political cooperation, among other things. It will be the first time that Russian President Vladimir Putin has publicly joined forces with other leaders since the invasion of Ukraine.There may also be some talk of further departure from the US dollar system.

Highlights for June 23:

  • Japan – Foreign Bond Investing (June 18)
  • Japan – Gibbon Bank Manufacturing PMI Flash (Jun)
  • Thailand – Trade Balance (May)
  • Philippines – Interest Rate Decision
  • Indonesia – Interest Rate Decision

Click here to view the full economic calendar for today

AUD/USD Technical Outlook

The AUD/USD currency pair reversed gains made earlier this week after prices fell near trendline support before paring some losses. This trend line may continue to support prices. The Relative Strength Index (RSI) and the MACD indicator remain weak, giving few signs of a shift in short-term momentum. To the upside, the psychologically imposing 0.7000 level may provide resistance if prices turn higher.

AUD/USD daily chart

The graph was created using TradingView

— By Thomas Westwater, Analyst for DailyFX.com

To contact Thomas, use the comments section below or Tweet embed on Twitter

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