11th May 2021 - AUD Pressured towards 0.7800 amid US dollar bounce, China inflation eyed

Good Morning,

Market Headlines

The price of oil is flat on the day after trading between a low of $63.97 and a high of $65.72. The main news stays with the ransomware attack that had forced the shutdown of pipelines supplying around 45% of fuel to the East Coast. With US authorities now combating the cyberattack, participants are left to operate in the dark.

Major equity indexes in the US started the new week on a mixed tone amid varying performances of major sectors. The S&P 500 Index, which touched a record-high of 4,238 on Friday, was down 0.13% at 4,227, the Dow Jones Industrial was rising 0.54% at 34,967 and the Nasdaq Composite was losing 1.28% at 13,544

Overnight Currency Ranges

AUD/USD 0.7837 0.7890

EUR/USD 1.2137 1.2178

GBP/USD 1.3983 1.4158

USD/JPY 108.47 109.05

NZD/USD 0.7269 0.7304

USD/CAD 1.2080 1.2130

USD/CNH 6.4039 6.4295

AUD/JPY 85.24 85.80

AUD/NZD 1.0769 1.0813

AUD Thoughts

AUD/USD remains depressed towards the 0.7820 previous resistance, around 0.7830 at the start of Tuesday’s Asian session. The pair dropped the most in a week the previous day after taking a U-turn from late February tops as optimism towards Fed policy continuation fizzled. Markets look for this week’s key US inflation data but today’s China Consumer Price Index (CPI) and Producer Price Index (PPI) is also important to watch consider its trade-ties with Canberra, despite recent jitters.

Looking forward, Australia’s HIA New Home Sales for April, previous 90.3%, may offer an intermediate direction to the AUD/USD prices ahead of China’s key inflation figures. Forecasts suggest that the CPI and Producer Price Index (PPI) are both likely to improve in April from 0.4% and 4.4% YoY to 1.0% and 6.6% in that order. If actual releases meet the market consensus, or even surpass, AUD/USD may rebound towards the 0.7900 resistance.

Despite failing to cross the 0.7900 hurdle, not to forget posting the first negative daily closing in four, AUD/USD sellers await a clear downside break of 0.7820 previous resistance, comprising multiple highs since early January, to beat the bulls. Following a sustained downside beneath 0.7820, the 0.7715-10 support confluence, including an ascending trend line from April 01, 100-day and 50-day SMAs, will be the key.

Event Risk Data Today

Australia: Australian Federal Budget & HIA New Home Sales for April

China: April CPI

Germany: May ZEW Survey

US: April small business optimism & Fed speak from Williams, Brainard & Daly