27th January 2021 - AUD/USD consolidates in the 0.7750s amid more cautious market feel

Updated: Feb 3

Good Morning,

Market Headlines

The market’s mood was sour at the beginning of the day but improved during the European session, in the detriment of the American dollar. The greenback edged lower against most major rivals, despite investors were cautious throughout the US session. Wall Street posted a modest intraday advance, while US Treasury yields ticked higher, but held near its weekly lows. Focus remains on US events, starting this Wednesday with the Durable Goods Orders report and the Federal Reserve announcement on monetary policy.

Coronavirus vaccines remain in the eye of the storm, amid delayed delivery. On a positive note, Pfizer announced it will look into a booster dose, one day after Moderna announced the same. Meanwhile, Johnson & Johnson said that it will publish coronavirus vaccine trial data next week and that the company is very optimistic that they will be releasing a very robust data set.

Commodities, Brent crude oil futures rose 0.1% to $55.90, copper fell 0.2%, iron ore fell 2.1% to $164.80, and gold fell 0.2%.

Overnight Currency Ranges

AUD/USD: 0.7669 – 0.7754

EUR/USD: 1.2108 – 1.2176

GBP/USD: 1.3610 – 1.3745

USD/JPY: 103.56 – 103.83

USD/CAD: 1.2689 – 1.2781

NZD/USD: 0.7169 – 0.7246

AUD/JPY: 79.57 – 80.33

AUD/NZD: 1.0683 – 1.0706

AUD Thoughts

The AUD/USD pair edged lower during the Asian trading hours as the risk-off market environment helped the greenback outperform its rivals. With a positive shift in sentiment ahead of the American session, however, the pair gained traction and was last seen trading at 0.7733, where it was up 0.33% on a daily basis..

AUD continued to trade within its recent ranges with all key technical levels remaining intact. Demand is expected to meaningfully materialise ahead of 0.7640 while offering interest at 0.7820 should slow any rise over the coming days.

Event Risk Data Today

Australia: The major release of the day will be Q4 CPI, the market expects headline CPI to print at 0.7%q/q (0.7%y/y), with the trimmed mean measure at 0.3%q/q (1.1%y/y). The December Westpac-MI leading index is likely to be strong on elevated iron ore prices, further gains in the ASX 200, and robust dwelling approvals. Following this, the December NAB business survey will be published – conditions were up 7pts to +9 in November as restrictions eased further.

US: The FOMC will announce its January monetary policy decision. The focus will be on the balance of risks now and in the medium term. Although the US has seen some supportive developments, including an increased likelihood of fiscal stimulus on Democrat control of the Senate, and the escalation of the vaccine rollout (albeit behind schedule), the FOMC will not begin to tighten policy in the foreseeable future. Chair Powell will hold the post-meeting press conference at 06:30 AEDT.