Daily brief: Australian dollar eyes retail sales as iron ore rises and US dollar falls

Thursday’s Asia-Pacific outlook

Asia-Pacific markets are set to trade higher after a rosy New York trading session. Traders moved into risk assets following the Federal Reserve’s policy announcement. The market trimmed future bets on aggressive rate hikes, dragging on Treasury yields and the US dollar. The tech-heavy Nasdaq-100 Index (NDX) rose more than 4%.

Iron ore prices rose in China despite a new wave of Covid lockdowns in Wuhan, where a million people were ordered to stay in their homes over the next three days. The higher iron ore prices and broader US dollar pullback boosted AUD/USD. Rio Tinto Group—an Anglo-Australian mining company—cut its dividend by 50%, which saw its stock price fall in European trading. The iron ore miner announced that it is close to a breakthrough on a new source of iron from Guinea after negotiating a deal with the country’s government.

The US Energy Information Administration (EIA) reported a large draw in crude oil and gasoline stockpiles in its latest weekly inventory report. That pushed crude oil prices higher. European gas prices rose amid falling flows from the Nord Stream 1 Pipeline. Russia’s Gazprom appears ready to follow through on further reductions to Europe. The high prices have eased the financial burden on Russia even as it moves less natural gas to Europe.

New Zealand’s business confidence index from ANZ will see an update today. The New Zealand dollar rose against the US dollar overnight. Australia’s retail sales for June are due out, with analysts expecting a 0.5% month-over-month increase, down from 0.9% m/m. A bright print may help the Aussie dollar extend gains as it would underpin optimistic hopes for the Australian Economy.

Notable events for July 28

• Japan – 2-Year JGB Auction

AUD/USD technical outlook

AUD/USD rose above its 50-day Simple Moving Average and is on track to hit its post-wedge breakout target of 0.7036. The MACD oscillator made a bullish cross above its midpoint on the daily chart and the Relative Strength Index is tracking higher above its midpoint. The 0.7000 psychological level may see some conflict in prices.

AUD/USD daily chart

This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.