Australian Dollar, Westpac Consumer Confidence, AUD/USD, FOMC – Talking Points
- Australia’s consumer confidence sees a small drop in December
- Markets appear defensive ahead of tonight’s FOMC rate decision
- China data dump, including retail sales, due out later today
Wednesday’s Asia-Pacific Forecast
The Australian Dollar is struggling against the US Dollar as a broader wave of risk-off sentiment moves through financial markets ahead of the highly-anticipated Federal Reserve rate decision due out tonight. Australia saw Westpac consumer confidence for December cross the wires at 104.3, down from 105.3 in November. AUD/USD failed to react to the data point. Later this week, Australia will report employment numbers for December, with analysts expecting a gain of 205k jobs.
Traders are likely to remain in a defensive stance ahead of tonight’s Federal Reserve decision. The central bank is expected to ramp up the speed of withdrawing stimulus, with a potential conclusion on asset purchases coming as soon as Q1 2022. US factory gate prices rose faster than expected in November, according to the producer price index (PPI) released this morning. That fueled inflation worries, which Chair Powell will likely speak to in his post-FOMC press conference.
China will provide a data dump of economic measures today, with house prices, fixed asset investment, industrial production, retail sales and unemployment figures due out around 02:00 GMT. November retail sales is seen falling to 4.6% from 4.9%, and fixed asset investment is also on track to drop from the prior month. However, industrial production may see a small increase to 3.6% from 3.5%, according to a Bloomberg survey. Overall, better-than-expected prints may help cull some risk aversion in markets, particularly in the Australian Dollar and industrial metals.
Later today, Australia’s HIA new home sales figure (Nov) is due out, Singapore will report a final read for the third-quarter unemployment rate, and Indonesia will release trade data (Nov). Japan’s Tertiary Industry Index is also set to cross the wires. Meanwhile, the US Dollar is inching higher, putting pressure on its major currency pairs and commodities. Brent oil prices fell more than one percent overnight.
AUD/USD Technical Forecast
AUD/USD’s overnight break below the August low at 0.7106 puts the currency pair in a pivotal spot. A failure to quickly recapture the level may see prices extend lower, with the November 2020 low at 0.6991 in focus as a possible bearish target. If prices manage to climb back above the August low, the falling 20-day Simple Moving Average (SMA) may put pressure on upward movement.
AUD/USD Daily Chart
Chart created with TradingView
— Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @FxWestwateron Twitter