AUD / USD, Fed Chair Powell, Covid, RBA – Questions to Talk
- Wall Street rallies amid falling volatility along with trading volume
- Spotlight: RBA Financial Stability Survey and Australian Housing Data
- AUD / USD tends to trendline resistance after H&S neckline rebound
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The Nasdaq 100 rose 1.04% on Thursday, bringing the tech index to within 1% of its all-time high in February. Market volatility fell to its lowest level since February last year, with the VIX falling to 17.0 amid low trading volume. The safe haven US dollar has weakened against most of its major peers.
As vaccinations continue at breakneck speed in the United States, state and local governments are lifting social distancing restrictions. This, coupled with warmer spring weather in the United States, is driving more people to leave their homes to eat out and enjoy other leisure activities. The OpenTable State of the Industry website shows that the number of visitors who run in and book places has increased significantly in recent weeks.
Federal Reserve Chairman Jerome Powell said, “It’s important to remember that we’re not going back to the same economy, it’s going to be a different economy,” during Thursday’s virtual debate. The central bank went on to suggest that jobs that did not exist before the pandemic would continue to exist, and some of those jobs would replace technology forever. In the US labor market, the number of initial jobless claims for the week ended March 27 exceeded 3,734 thousand, which is slightly higher than the average forecast of 3,650 thousand people.
Friday Forecast for Asia Pacific
Asia Pacific markets will be the focus of the Biennial Financial Stability Review (FSR) of the Reserve Bank of Australia. Earlier this week, the RBA released its April interest rate decision when the central bank kept its benchmark interest rate unchanged at 0.1%. The focus will be on skyrocketing housing prices in the country as politicians are increasingly wary of them.
Speaking of Australia’s housing market, the final building permits figure for February will cross borders today, with analysts forecasting 21.6% growth per month, according to data DailyFX Economic Calendar… Markets may face situational risk from China, where inflation data will fall. Chinese markets were higher on Thursday, with the CSI 300 and Hang Seng Index (HSI) adding 0.17% and 1.16%, respectively.
Meanwhile, in the Asia Pacific government bond markets, buyers are returning to the fold as traders roll back rates to cut rates. The move was prompted by the Treasury market after the US Federal Reserve cut market expectations for a Fed rate hike earlier than expected. The yield on Australia’s 10-year bonds fell more than 5.5% over the week. The declining yield is a tailwind for stocks as the yield spread rises in favor of the stock.
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AUD / USD Technical Forecast
The Aussie against the US dollar appears to be preparing to test the downtrend line after the bullish MACD crossover above the signal line. First, the AUD / USD pair will need to break through the 100-day simple moving average (SMA) with resistance shortly thereafter. Earlier this week, prices bounced higher off the neckline of the Head and Shoulders.
Daily chart AUD / USD
The chart was created with TradingView
AUSTRALIAN DOLLAR TRADE RESOURCES
— Posted by Thomas Westwater, Analyst at DailyFX.com
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