Good Morning,
Welcome to our daily market update where we help keep you informed on the latest happenings in the world of FX and show you what this means for the Mighty Aussie Dollar.
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Key Data Being Released Today Tuesday the 4th of January 2022
- OPEC – JMMC Meeting
The Aussie Dollar – Fundamentals
AUD/USD has seen quite a sharp pullback in recent trade, dropping from 0.7277 to current levels below 0.7200. Volumes during the Asia Pacific and early European sessions were much lower than normal and roughly in line with that seen during last week’s thinned holiday trade given the closure of Australian and UK financial markets on Monday. Thus, as trading volumes have started to pick up for the US session, markets seem to have found a little conviction, with the conviction in FX markets on Monday being a preference towards a stronger dollar.
The Aussie’s performance is broadly in fitting with G10 FX markets adopting a more defensive/risk-off bias on Monday, with the safe-haven dollar and yen outperforming despite stocks in Europe and the US (in pre-markets, at least) trading higher. There isn’t any one theme or new developments that can be pointed at as to why FX markets are in a more risk-off mood, but traders may be taking some profit on risk-sensitive currencies after their recent run of strength.
Some are fretting about record Omicron infection rates in the UK, US and elsewhere and a potential surge in hospitalisations. Elsewhere, some have suggested the surge in the dollar versus some of its G10 peers could be down to a large rise on the day in US bond yields (10s up 9bps to near 1.60% and 2s up roughly 6bps to just under 0.80%). If this was the case, you would expect that USD/JPY (the most sensitive G10 pair to movements in rate markets) would be surging, which at the moment it isn’t.
The Aussie Dollar – Technical Analysis
The market failed to consolidate its break of the 50 Day MA overnight, before falling sharply. This is always an interesting time of years as market moves can be exaggerated due to the lower volumes traded during the holiday period.
Resistance on the Top Side – We see resistance at 0.7244 (50DMA). If the market rebounds we see further resistance at 0.7300.
Support on the Downside – With the fall overnight we see the market heading for support at 0.7172. If this level is broken, we see further support at 0.7110 and 0.7000.
AUD/USD Daily Chart
DXY (USD INDEX) Daily Chart
Major Global Markets
- Stocks
- S&P 500 closed at 4796
- NASDAQ closed at 16508
- ASX 200 closed at 7444
- Currencies
- AUD/USD – At the time of writing this report trades at 0.7188
- AUD/JPY – At the time of writing this report trades at 82.97
- AUD/CNH – At the time of writing this report trades at 4.5774
- DXY (US Dollar Index) – At the time of writing this report trades 96.235
- AUD/EUR – At the time of writing this report trades 0.6367
- Bonds
- US 10-year Bonds are currently at 1.637
- Aussie 10-year Bonds are currently at 1.793
- Commodities
- Iron Ore 62% – Trading at USD/T 120.4
- Gold – trading at USD/OZ 1803
- Brent Crude Oil – Trading at USD/Bbl 78.9