AUD/USD chart flags bullish potential as RBA nears amid China lockdown
Asia-Pacific traders eye Ukraine, China lockdowns, central banks to kick off the week and RBA policy meeting in focus as traders try to zero in on when rates will begin to rise.
Monday’s Asia-Pacific outlook
sia-Pacific markets will kick off the week with a focus on tomorrow’s interest rate decision out of Australia. The Reserve Bank of Australia (RBA) is expected to hold rates steady at 0.1%, but expectations for a hike in the second half of the year have strengthened in recent weeks. Those expectations have seen the yield on Australia’s 10-year bond climb nearly 100 basis points in just four weeks. It is currently trading just below 3.0%, the highest level since May 2018.
Although analysts remain split on when the RBA’s first rate hike in more than a decade will take place, the majority see liftoff occurring at the June, July or August meeting. The Australian Dollar has taken advantage of these hawkish perceptions, with the currency moving higher versus its major peers through March. However, the 2022 Australian federal election set to take place in May adds a layer of complexity to predicting a rate hike. RBA Governor Lowe may prefer to keep rate steady so close to an election.
This morning, the Melbourne Institute inflation gauge for March will cross the wires, followed by a final reading on February retail sales and March job advertisements from ANZ Bank. A solid showing in those data prints may help to strengthen the Aussie Dollar. Later today, India will report manufacturing PMI data for March, and Thailand will report business confidence for the same period.
Crude oil prices will likely remain under close observation as the conflict in Ukraine rages as war crime accusations grow. The current Covid outbreak in China has locked down Shanghai – a major financial hub – and cases are still rising despite the restrictions. Extended lockdowns may begin to exact a toll on China’s stock market, particularly at a time when the rest of the world continues to roll back restrictions. Demand-sensitive oil prices treaded lower alongside last week’s news of a supply release from US strategic reserves.
AUD/USD technical forecast
AUD/USD consolidated last week following several weekly gains. That movement has created a Bull Flag pattern, which may precede further gains. A break above flag resistance could see prices climb to fresh 2022 highs. The October 2021 top at 0.7556 may act as resistance. Alternatively, a break below Flag support could see the 78.6% Fibonacci level at 0.7430 come into focus. The 61.8% Fib at 0.7331 follows.
AUD/USD 8-hour chart
Follow Thomas Westwater on Twitter @FxWestwater
This information has been prepared by DailyFX, the partner site of IG offering leading forex news and analysis. This information Advice given in this article is general in nature and is not intended to influence any person’s decisions about investing or financial products.
The material on this page does not contain a record of IG’s 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.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
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. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Start trading forex today
Trade the largest and most volatile financial market in the world.
- Spreads start at just 0.6 points on EUR/USD
- Analyse market movements with our essential selection of charts
- Speculate from a range of platforms, including on mobile
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.