Daily brief: AUD/USD stalls at 50-day SMA as APAC markets weigh growth concerns

Tuesday’s Asia-Pacific outlook

Asia-Pacific sentiment may sour after a worrying report from Walmart weighed on US stock futures after the New York closing bell. Walmart downgraded its profit forecast out to 2023, citing double-digit food prices and their impact on consumer spending. The benchmark S&P 500 rose 0.13%, while the tech-heavy Nasdaq-100 Index (NDX) fell 0.55%.

The US dollar is slightly softer after a volatile 24 hours of trading. The Australian dollar gained against most of its peers, benefiting from higher iron ore prices in Asia. Copper prices were higher as well. Traders may remain cautious ahead of this week’s FOMC meeting on Wednesday when policymakers are seen hiking by 75-basis-points.

Europe’s natural gas flows from Russia are expected to fall after Gazprom, Russia’s state-backed natural gas company, stated that flows through Nord Stream 1 are set to drop to 33 million cubic meters per day. European natural gas prices rose 10% overnight. A business confidence gauge for Europe fell to the lowest level since the pandemic started, with higher energy prices weighing heavily on the gauge.

Crude oil prices rose on renewed supply concerns despite growing fears of economic stagnation around the globe. While the WTI prompt spread rose slightly, it was the 1:1 RBOB/CL crack spread that saw a significant response, rising more than 10%, reflecting higher refinery demand. Tonight’s API inventory report for US stockpiles may influence oil prices as traders await several potentially high-impact economic prints later this week, including the US advance second-quarter GDP growth report.

Notable events for July 26

• Philippines – Budget Balance (June)
• Thailand – Balance of Trade (June)
• Singapore – Industrial Production (June)

AUD/USD technical outlook

AUD/USD rose overnight but the 50-day Simple Moving Average (SMA) capped upside. The post-wedge move has a target of 0.7036, which may be reached shortly if bulls manage to pierce the aforementioned SMA and the psychological 0.7000 level. The Relative Strength Index (RSI) and MACD oscillators show positive movement, suggesting healthy underlying momentum in the cross.

AUD/USD daily chart

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