Written by Steven Dooley, Head of Market Insights, and Shier Lee Lim, Lead FX and Macro Strategist
Aussie back near lows
The Australian dollar fell back toward multi-year lows on Tuesday as US shares weakened and markets looked ahead to a key local inflation report.
US shares have mostly traded sideways since early December and last night’s move saw the US’s S&P 500 back towards the lower end of the trading range. The S&P 500 fell 1.1%.
In FX markets, the USD recovered, while most other currencies fell.
The AUD/USD fell 0.2% while NZD/USD lost 0.1%.
In Asia, USD/SGD was flat while USD/CNH lost 0.1%.
Australian monthly CPI data in focus
Today, the CPI for Australia will be released at 11.30am AEDT.
While the quarterly CPI data continues to be more significant for the RBA, other factors, such as those related to meals out and takeout, as well as a number of service costs, will be crucial for our whole Q4 CPI tracking.
According to survey data, the Q4 CPI is at risk of declining, and we will be watching for evidence to corroborate this in this month’s announcement.
Following the unexpectedly hawkish FOMC meeting, the AUD/USD attempted to regain ground.
The 0.6349–0.6396 range should now serve as a crucial resistance area.
Euro pressured on German industrial weakness
The euro was also lower overnight with the Brish pound also weaker. European CPI was in line with expectations.
Looking forward, Germany’s industrial production for November is due later in the week. In November, we anticipate a 1.3% monthly reduction in Germany’s industrial production, highlighting the country’s ongoing industrial slump.
Car production, which decreased 14.8% month over month in November, and ongoing weakness in manufacturing surveys for the month are the causes of the deterioration.
EUR/USD is now in a descending price channel with 50-day EMA act as next strong key resistance level at 1.0548. Following that, the next key resistance will be 200-day EMA 1.0756. The euro has also fallen versus the Singapore dollar with EUR/SGD near 30-month lows, however it remains more resilient versus the AUD and NZD.
USD remains dominant
Table: seven-day rolling currency trends and trading ranges
Key global risk events
Calendar: 6 – 11 January
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*The FX rates published are provided by Convera’s Market Insights team for research purposes only. The rates have a unique source and may not align to any live exchange rates quoted on other sites. They are not an indication of actual buy/sell rates, or a financial offer.
