AUDUSD SIGNAL : AUDUSD slides on the back of poor Caixin Services data
- AUD/USD dips on poor Chinese Services data, weighed by USD.
- The US dollar was firm overnight on the back of hawkish Fed expectations.
AUDUSD SIGNAL : At 0.7565, AUD/USD is losing 0.17% after falling to a low of 0.7561 from a high of 0.7593, recently falling on the back of China’s Caixin services PMI for March that came in at 42.0 vs. 53.0 expected and 50.2 last, showing that the country’s services activity contracted on coronavirus outbreak-induced lockdown measures.
The data has weighed on the currency that was already under pressure from a strong US dollar despite the hawkish switch-up at the Reserve Bank of Australia. Federal Reserve Governor Lael Brainard spoke and talked about potential aggressive actions by the Fed in anticipation of hawkish minutes tomorrow. As a consequence, the US Treasury yields surged to multi-year highs and the DXY, an index that measures the greenback vs a basket of currencies, ran up to test 99.50 to print a fresh high for 2022 at 99.493.
AUDUSD SIGNAL : Looking ahead to the day, the Fed March meeting will be released. ‘The FOMC pull no hawkish punches in its policy guidance, with Chair Powell also hinting further information about QT plans will be provided in the minutes (possibly including caps details). We continue to expect an official QT announcement at the May FOMC meeting,” analysts at TD Securities said.
As for the RBA, it gave a hint yesterday that it ”might have to raise rates from 0.1% in the face of global inflation, booming Aussie commodity exports, and such ridiculous building approvals and house-price data that either the economy is on fire, or the credibility of the Australian Bureau of Statistics is in tatters,” analysts at Rabobank said.
”The Aussie 10-year yield now stands at 2.93%, up from 0.61% back in 2020, while 2s, nearer to the lifeblood of the Aussie economy, mortgage debt, is at 2.04%, again nearly all the way back to the 2018 levels prevailing before the RBA started to cut rates.”
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