China’s CPI data weighs on AUD

  • China’s CPI has landed at 1.5%, against the expectation of 0.1% and previous readout of 0.9%.
  • The Fed’s hawkish outlook and the dovish RBA has underpinned the bearish trend for AUD/USD.
  • Ukraine woes weigh on the market sentiment.

 

The Australian dollar lost its ground against the American dollar during Monday trading session despite as China’s CPI lands at 1.5%.

China’s National Bureau of Statistics has reported the yearly Consumer Price Index (CPI) at 1.5% against the expectation of 0.1% and previous readout of 0.9%. The China’s monthly CPI was reported at 0.0% against the expectation of -0.1% but less than previous readout of 0.6%.

While Producer Price Index (PPI) was reported at 8.3% that has outperformed the expectation of 7.9% but has remained lower than the previous print of 8.8%.

The upbeat data has rose the expectation for aggressive policy easing by the People’s Bank of China (PBOC). This, in turn, acted as a headwind for the China-proxy Australian dollar amidst the US dollar strength.

Meanwhile, Reserve Bank of Australia (RBA) kept its policy unchanged on Tuesday. An unchanged monetary policy and a less-dovish stance by the RBA were highly expected by the market participants since the inflation in the world economy is surging higher while the growth rate is not advancing proportionally.

On the other hand, bullish sentiment is surrounding the US dollar. Rising inflation and a tight labor market in the US economy are aiming for a healthy interest rate hike by the Fed in May’s monetary policy. The US Unemployment Rate has fallen to 3.6% and is been printing below 4% consistently for the last three months, which indicates an achievement of full employment levels. Whereas the US Consumer Price Index (CPI) will be released on Tuesday. A preliminary estimate for the yearly US CPI at 8.3% against the previous figure of 7.9% will be an alarming situation for the market. This will elevate an interest rate hike by 50 basis points (bps).

Ukraine crisis also weigh on the market sentiment, Russian forces pounded targets in eastern Ukraine with missiles and artillery on Sunday, as Austria’s leader planned to meet with Russian President Vladimir Putin.

AUD/USD 4 Hour Chart:

Support: 0.7420 (S1), 0.7390 (S2), 0.7354 (S3).

Resistance: 0.7486 (R1), 0.7522 (R2), 0.7553 (R3).

Amidst all the catalysts weighing on the AUD, we expect a bearish trend for AUD/USD.

BTC/USD Weekly Forecast (11th April 2022 – 15th April 2022)

Fundamental view:

Bitcoin had a bad week against the US dollar. The hawkish stance by the Fed Policymakers favored the US dollar. The Fed unveiled the monetary policy this week. FOMC Minutes were far more aggressive than anticipated. US policymakers “generally agreed” on reducing the balance sheet by $95 billion a month, which will likely begin in May.  A maximum of $60 billion in Treasuries and $35 billion in mortgage-backed securities would be allowed to roll off per month. At the same time, the document hinted at upcoming 50 bps rate hikes, instead of the average 25 bps as hiked in March.

Panelists at a discussion on the current macro backdrop at Bitcoin 2022 have argued that macroeconomic landscape for bitcoin (BTC) could become more difficult to navigate as the US Federal Reserve continues to raise interest rates. However, bitcoin is the only way to transition to a new monetary standard Dr. Jeff Ross, founder and CEO of Vailshire Capital Management, urged the audience to get “mentally ready for what could happen” to the bitcoin price in the short-term. Bitcoin is still strongly correlated to the stock market, he said, warning that planned rate hikes by the Federal Reserve (Fed) could translate into lower stock prices going forward. However, Ross still said that bitcoin remains a viable way to store value and save money over the long-term, given how he expects fiat money to decline in value.

The major economic events deciding the movement of the pair in the next week are Fed Governor Bowman Speech at Apr 11, Federal Budget Balance at Apr 12, EIA Crude Oil Stocks Change at Apr 13, Retail Sales monthly report, Initial Jobless Claims, Michigan Consumer Sentiment at Apr 14 and Fed Industrial Production yearly report at Apr 15 for US.

BTC/USD Weekly outlook:

Technical View:

Last week’s high was 1.66% lower than the previous week. Maintaining high at 47388.6 and low at 42117.4 showed a movement of 5271 pips.

In the upcoming week we expect BTC/USD to show a bearish trend. The Instrument is trading below the 200 Simple Moving Average and the MACD trades to the downside. Should 40525.4 proves to be unreliable support then the pair may fall further to 38685.8 and 35254.2 respectively whereas a solid breakout above 45796.6 will open a clear path upward to 49228.2 and then will further raise up to 51067.8. In H4 chart head and shoulders pattern breakout favors prospects of a bearish trend. Shooting star pattern constructs a bearish outlook for the pair in the upcoming week.

Preference
Sell: 42385.1 target at 37772.4 and stop loss at 45800.4

 

Alternate Scenario
Buy: 45800.4 target at 51066.8 and stop loss at 42385.1

XAU/USD Weekly Forecast (11th April 2022 – 15th April 2022)

Fundamental view:

The yellow metal traded up against the US dollar during the trading course of the week. Despite the dollar strength, gold managed to hold its ground on safe haven flows in the risk averse market sentiment. The Fed unveiled the monetary policy this week. FOMC Minutes were far more aggressive than anticipated. US policymakers “generally agreed” on reducing the balance sheet by $95 billion a month, which will likely begin in May.  A maximum of $60 billion in Treasuries and $35 billion in mortgage-backed securities would be allowed to roll off per month. At the same time, the document hinted at upcoming 50 bps rate hikes, instead of the average 25 bps as hiked in March.

The impact of Ukraine uncertainty favored the precious metal- Gold. European Commission President Ursula von der Leyen announced a ban on Russian coal imports, roughly worth around €4 billion a year, on Tuesday. Additionally, the US and the UK decided to disallow new investments in Russia and block all transactions with several major Russian banks.               

The major economic events deciding the movement of the pair in the next week are Fed Governor Bowman Speech at Apr 11, Federal Budget Balance at Apr 12, EIA Crude Oil Stocks Change at Apr 13, Retail Sales monthly report, Initial Jobless Claims, Michigan Consumer Sentiment at Apr 14 and Fed Industrial Production yearly report at Apr 15 for US.

XAU/USD Weekly outlook:

Technical View:

Last week’s high was 0.56% lower than the previous week. Maintaining high at 1948.2 and low at 1914.9 showed a movement of 333 pips.

In the upcoming week we expect XAU/USD to show a bullish trend. The Instrument is trading above the 200 Simple Moving Average and the MACD trades to the upside. A solid breakout above 1958.7 may open a clean path towards 1970.1 and may take a way up to 1992.0. Should 1925.4 prove to be unreliable support, the XAUUSD may sink downwards 1903.5 and 1892.1 respectively. In H4 chart double bottom pattern favors prospects of a bullish trend. Also to be noted Hammer formation exerts the expectation of uptrend for the pair.

Preference
Buy: 1947.3 target at 1980.5 and stop loss at 1920.7

 

Alternate Scenario
Sell: 1920.7 target at 1893.4 and stop loss at 1947.3

AUD/USD Weekly Forecast (11th April 2022 – 15th April 2022)

Fundamental view:

The Australian dollar made modest losses against its American dollar rival. The hawkish fed amidst the risk averse market sentiment due to the Ukraine uncertainty favored the US dollar. Whereas hawkish stance by the RBA favored the Aussie. The Fed unveiled the monetary policy this week. Minutes from last month’s Federal Open Market Committee (FOMC) meeting made the reduction plan concrete. “Participants generally agreed that monthly caps of about $60 billion for Treasury securities and about $35 billion for agency MBS would likely be appropriate. Participants also generally agreed that the caps could be phased in over a period of three months or modestly longer if market conditions warrant,” stated the minutes.

On the other hand, RBA dropped the patient stance Lowe said “The main sources of uncertainty relate to the speed of resolution of the various supply-side issues, developments in global energy markets and the evolution of overall labor costs.”. Meanwhile, Policymakers also dropped their patient approach, and the removal of several key sentences from the central banks’ statement hinted at a possible rate hike in the upcoming meetings.  They also said that the next decisions would be based on inflation and labor cost data. Given the Australian Federal election in May, speculative interest is now pricing in a rate hike in June.

In this week, RBA Interest Rate Decision on 5th April and EIA Crude Oil Stocks Change on 6th April boosted uptrend whereas Australia S&P Global Services PMI on 5th April , FOMC minutes on 6th April and Initial Jobless claims on 7th April boosted downtrend for the pair.

The major economic events deciding the movement of the pair in the next week are Australia NAB Business Confidence, Federal Budget Balance at Apr 12, Australia Employment Change, US Retail Sales monthly report, Initial Jobless Claims, Michigan Consumer Sentiment at Apr 14 and Fed Industrial Production yearly report at Apr 15.

AUD/USD Weekly outlook:

Technical View:

Last week’s high was 1.60% higher than the previous week. Maintaining high at 0.7660 and low at 0.7426 showed a movement of 234 pips.

In the upcoming week we expect AUD/USD to show a bearish trend. The currency pair is trading below the 100 Simple Moving Average and the MACD trades to the downside. Should 0.7365 proves to be unreliable support then the pair may fall further to 0.7278 and 0.7131 respectively whereas a solid breakout above 0.7599 will open a clear path upward to 0.7746 and then will further raise up to 0.7833. In H4 chart descending triangle breakout favors prospects of a bearish trend. Also to be noted bearish engulfing formation exerts the expectation of downtrend for the pair.

Preference
Sell: 0.7451 target at 0.7245 and stop loss at 0.7604

 

Alternate Scenario
Buy: 0.7604 target at 0.7832 and stop loss at 0.7451