Australian Dollar, AUD/USD, Japan CPI, Covid, Holiday Trading – Talking Points
- Risk assets gain as Covid fears set aside on encouraging data
- Quiet APAC session expected on light holiday trading volumes
- AUD/USD puts in fresh monthly high after overnight gains
Friday’s Asia-Pacific Forecast
Asia-Pacific markets may move higher to end the week after a bullish US session. The S&P 500 closed at a record high. Investors’ concerns over the Omicron variant are now firmly on the back burner as new data confirms the variant is less deadly than prior strains. The US Dollar peeled back despite a hotter-than-expected US inflation report. The risk-sensitive Australian Dollar rose to its highest level since mid-November.
Japanese inflation data crossed the wires this morning, with the November core consumer price index (CPI) crossing the wires at 0.5% on a year-over-year basis. That was above what analysts were expecting at 0.4%, according to a Bloomberg survey. Japan will report housing starts and construction orders (Nov) later today. Singapore is also set to release industrial production data for November, and the Philippines will report October retail sales numbers.
The Christmas holiday will see reduced trading volumes today as many traders are already off the desk. Australian and New Zealand markets will close early today. Tonight’s European session will likely see a thin trading session, with many of the markets closed on Friday. The Turkish Lira’s rebound versus the US Dollar continued overnight, with USD/TRY trading near the 11 mark.
The markets look healthy going into the New Year.However, health experts are worried that a surge in Covid cases may follow in the coming weeks. Daily Covid cases are increasing across many Asia-Pacific countries, Europe, and the United States already. A surge could see policymakers increase social distancing measures, which could add a headwind to the global recovery.
AUD/USD Technical Forecast
AUD/USD broke into a fresh monthly high overnight, marking the currency pair’s third consecutive daily gain. Prices are pulling back slightly in the early Asia-AM hours. The prior December swing high at 0.7223 may provide a level of support for bulls to remain in control. The MACD oscillator is nearing a cross above its centerline, a bullish sign. A further move higher will likely target the falling 50- and 100-day Simple Moving Averages that sit shortly above the fresh monthly high.
AUD/USD Daily Chart
Chart created with TradingView
— Written by Thomas Westwater, Analyst for DailyFX.com
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