ASIAN MARKET

AUD / NZD aims higher with Chinese economic data in sight


Treasury Yields, US Impeachment, AUD / NZD – Talking Points

  • Wall Street traders insensitive to congressional impeachment
  • T-bill yields fall after strong demand for 30-year bond auctions
  • AUD / NZD the rally could continue with bullish technical signals on the horizon

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U.S. markets have ignored the looming political implications surrounding a likely second impeachment of President Donald Trump on Wednesday. the S&P 500 increased by 0.23% while Nasdaq The composite gains 0.43%. Small-cap stocks lagged the market as a whole, with the Russell 2000 Index falling 0.75%. The Dow Jones Industrial Average traded mostly sideways, losing just 0. 10% on the day.

Wall Street started the day with inflation data for December that beat analysts’ expectations, but the gains were mostly driven by rising energy prices. Still, higher inflation bets for the future persist as investors contemplate a pro-stimulus environment under the new Biden administration.

DailyFX Calendar

Source: DailyFX Economic Calendar

The US House decided to impeach President Trump after the New York closing bell, accusing incitement to insurgency, though markets continued to ignore the news. Earlier today, Fed Governor Lael Brainard tightened the Fed’s timetable on maintaining asset purchases until further progress towards the central bank’s dual tenure.

US 10Y Yield, Nasdaq, Dow Jones – 30 Minute Chart

10-year cash against Dow and nasdaq futures contracts

Chart created with TradingView

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Thursday’s Asia-Pacific Outlook

Asia-Pacific markets could extend their gains from Wednesday following lower yields on long-term US government bond yields. A strong auction of $ 24 billion in 30-year Treasuries on Wednesday morning knocked the 30-year yield down nearly 3%. Recent strength seen in the US dollar As yields declined, the DXY index started to rise slightly after a brief dip below the 90 handful.

Investors will look to the future for China’s economic data early Thursday when December trade and foreign direct investment figures cross threads. According to the DailyFX economic calendar, analysts expect China’s trade balance to reach US $ 72.35 billion. The economic release may help steer analysts’ expectations for next week’s much-anticipated fourth-quarter GDP release, with current forecasts calling for 6.1% year-on-year growth for the Chinese economy.

China’s net exports are likely to have a ripple effect on closely related economies such as Australia and New Zealand. Both countries’ currencies outperformed against the greenback in 2020, but the Aussie-dollar outperformed compared to Kiwi. The trend so far this year seems to have AUD/NZD on track to repeat this performance. The Australian dollar tends to take advantage of high commodity prices that support the economy through its export channels, largely thanks to China.

AUD / NZD technical outlook:

The AUD / NZD rally from its December balancing low recently took the crossover to multi-month highs, erasing the November 2020 high earlier this week. Rising MACD divergence signals healthy momentum and RSI Oscillator almost eclipses the 70 level. The November high mentioned above may provide downside support.

Above, the AUD / NZD will face the 61.8% Fibonacci retracement level from the August-December 2020 move. Additionally, a Simple moving average a cross between the 20 and 200 day SMAs may form if the bullish action continues. The signal could generate more upside in the short term.

AUD / NZD Daily Chart

AUDNZD price table

Chart created with TradingView

AUD / NZD Trading Resources:

— Written by Thomas Westwater, Analyst for DailyFX.com

To contact Thomas, use the comments section below or @FxWestwater on Twitter



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