AUD/NZD Aims Higher with Chinese Economic Data in Focus

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

  • Wall Street traders unfazed by impeachment proceedings in Congress
  • Treasury yields move lower after strong auction demand on 30-year bonds
  • AUD/NZD rally may continue with bullish technical signals on horizon
Top Trading Opportunities in 2021

Top Trading Opportunities in 2021

Recommended by Thomas Westwater

Get Your Free Top Trading Opportunities Forecast

US markets ignored impending political implications surrounding a likely second impeachment of President Donald Trump on Wednesday. The S&P 500 rose 0.23% while the Nasdaq Composite gained 0.43%. Small-cap stocks lagged the broader market, with a 0.75% decline in the Russell 2000 index. The Dow Jones Industrial Average traded mostly sideways, losing only 0.10% on the day.

Wall Street started the day with inflation data for December that crossed the wires above analysts’ expectations, but the gains were mainly driven by higher energy prices. Still, higher inflation bets for the future persist as investors look ahead to a pro-stimulus environment under the incoming Biden administration.

DailyFX Calendar

Source: Finance Prop Economic Calendar

The US House did move to impeach President Trump after the New York closing bell, accusing incitement of insurrection, though markets continued to discount the news. Earlier in the day, Fed Governor Lael Brainard reinforced the Fed’s timeline on sustaining asset purchases until achieving more progress towards the central bank’s dual mandate.

US 10-Year Yield, Nasdaq, Dow Jones – 30-Min Chart

10 year treasury versus Dow and nasdaq futures

Chart created with TradingView

How to Use IG Client Sentiment in Your Trading

How to Use IG Client Sentiment in Your Trading

Recommended by Thomas Westwater

Improve your trading with IG Client Sentiment Data

Thursday’s Asia-Pacific Outlook

Asia Pacific markets may extend gains from Wednesday following weaker yields across long-dated US government bond yields. A strong auction for $24 billion of 30-year Treasuries on Wednesday morning pushed the 30Y yield down nearly 3%. The recent strength seen in the US Dollar eased alongside the drop in yields, but the DXY index began to inch higher following a brief drop below the 90 handle.

Investors will look ahead to economic data out of China early Thursday when trade figures and foreign direct investment for December will cross the wires. According to the Finance Prop Economic Calendar, analysts expect China’s balance of trade to come across at US$72.35 billion. The economic print may help guide analysts’ expectations for next week’s highly anticipated Q4 GDP print, with the current forecast calling for 6.1% YoY growth for China’s economy.

China’s net exports are likely to have a spillover effect on closely linked economies such as Australia and New Zealand. Both countries’ currencies outperformed against the Greenback in 2020, but the Aussie-dollar outperformed against the Kiwi. The trend so far this year appears to have AUD/NZD on track to repeat that performance. The Australian Dollar tends to benefit from strong commodity prices bolstering the economy through its export channels, largely thanks to China.

AUD/NZD Technical Outlook:

The rally in AUD/NZD from its December swing low has recently brought the cross to multi-month highs, clearing the November 2020 peak earlier this week. The MACD’s growing divergence signals healthy momentum and the RSI oscillator is nearly eclipsing the 70 level. The aforementioned November high may provide support to the downside.

Above, AUD/NZD will face the 61.8% Fibonacci retracement level from the 2020 August-December move. Moreover, a bullish Simple Moving Average crossover between the 20- and 200-day SMAs may form if bullish action continues. The signal could generate further upside in the near term.

AUD/NZD Daily Chart

AUDNZD Price Chart

Chart created with TradingView

AUD/NZD Trading Resources:

— Written by Thomas Westwater, Analyst for Finance

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

Source link

By Jonathan Prop

Jonathan Prop is an independent financial advisor. He has been working in finance for the last 20 years. After retiring early in his 40s, Jonathan decided to help others get to grip with financial markets, particularly his area of expertise - forex!

Leave a comment

Your email address will not be published. Required fields are marked *