- AUD/USD takes offers to renew intraday low, snaps two-day uptrend and five-week rally.
- RBA’s Lowe signalled rate lift during late 2022 but managed to avoid being hawkish.
- Jump in China’s daily covid infections, fears over escalating Russia-Ukraine crisis weigh on the market’s mood.
- US CPI bolstered hopes of Fed’s 0.50% rate-hike in March, Michigan Consumer Sentiment Index eyed.
AUD/USD adds losses to the first weekly fall in six while taking offers around 0.7340 during Friday’s Asian session.
The risk-barometer pair recently dropped on concerns over a fresh jump in China’s covid cases, as well as fears concerning the Russian invasion of Ukraine. Also contributing to the pair’s weakness could be the previous day’s US inflation data and the following hopes of faster rate hikes from the Fed. In doing so, the quote fails to cheer the early-day comments from the Reserve Bank of Australia (RBA) Governor Philip Lowe.
Despite repeating Thursday’s call of rate-hike later this year, RBA’s Lowe noted core inflation in Australia was still modest at 2.6% and wages were growing only gradually, which allowed time before a hike, per Reuters.
On the other hand, CME’s FedWatch Tool flash 94% probabilities of 50 basis points of a rate-hike March. The expectations rose after the US Consumer Price Index (CPI) refreshed its 40-year high while matching the 7.9% YoY forecast for February the previous day.
Talking about risk catalysts, China reported the first above 1,000 fresh covid cases in over two years. The dragon nation was the first to ring the alarm of coronavirus pandemic and hence the fresh jump in COVID-19 infections isn’t a good sign for the markets.
It should be noted that reports of a Russian military attack on Kharkiv institute that contains an experimental nuclear reactor initially challenged the market’s mood before the news of no negatives tamed fears. In the same way, chatters swirled that Moscow’s forces are gradually dispersing and may be retreating also favored the optimists before the US Satellite company Maxar’s update suggesting more troops being redeployed.
While portraying the risk-off mood, S&P 500 Futures drop 0.25% on a day while the US 10-year Treasury yields drop 4.4 basis points (bps) to 1.965% by the press time.
Looking forward, United Nations (UN) is up for a Security Council on request from Russia and could entertain the traders with geopolitical headlines whereas the US Michigan Consumer Sentiment Index for March, expected 61.3 versus 62.8, will also be important to follow.
Technical analysis
AUD/USD remains on the buyer’s radar as it stays above the key moving averages amid the bullish MACD signals.
That said, the bulls eye another battle with a downward sloping trend line from late February 2021, around 0.7420.
Meanwhile, the 200-DMA guards the quote’s immediate downside around 0.7315, a break of which will direct AUD/USD sellers toward the 100-DMA level of 0.7230.
