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Forex News

Above 0.6300 on Good Friday holiday with eyes on China CPI

  • AUD/USD consolidates from the recently flashed four-week high.
  • Broad US dollar weakness, amid Fed’s action and downbeat data/comments, helped the Aussie.
  • Markets in Australia/US are closed for Good Friday, Chinese markets are up with March month inflation data on the cards.

AUD/USD remains above 0.6300, despite stepping back from the monthly high of 0.6363 to currently around 0.6330, at the start of Friday’s Asian session. While the broad US dollar weakness could be considered as the reason for the pair’s earlier upside moves, the latest pullback could be attributed to the fears of the coronavirus.

Fed’s Powell and Jobless Claims managed to harm the greenback…

Downbeat comments from the US Federal Reserve Chairman Jerome Powell and another six million-plus figures of the weekly Jobless Claims were enough for the markets to pay a little heed to the Fed’s surprise action.

The Fed Chair Powell could be the first central banker among the top-tier ones to suggest that the US economy is moving towards very high unemployment. The fact got support from the latest weekly Jobless Claims that crossed 5,250K forecast with 6,606K while upwardly revising the previous to 6,867K from initially report figures of 6,648K.

The Federal Reserve (Fed) surprised markets with additional actions to help the mid-sized business while using the already announced $2.3 trillion in loans to support the economy.

Amid all this, the US dollar continued to bear the burden of the coronavirus crisis and downbeat data while marking across the board losses. The same helped the Aussie to forget the early-day losses based on downbeat data at home and worries spread by the RBA’s bi-annual Financial Stability Review (FSR) report.

Even so, the market’s risk-tone flashed mixed results as the US 10-year treasury yields closed the day on the negative side to 0.73% whereas Wall Street flashed another daily positive closing with DJI30 at monthly high.

Given the absence of the Aussie traders, due to the Easter break, the pair may witness a lack of liquidity ahead of Japan and China open. However, the Chinese Consumer Price Index (CPI) for March will be the key to watch as it comprises the month of the coronavirus crisis. The headline CPI is expected to soften from 5.2% to 4.8% on YoY while the MoM figures suggest more weakness to -0.7% versus +0.8% earlier readouts. Additionally, the Producer Price Index (PPI) could also drop to -1.1% against -0.4% previous mark.

Technical analysis

50-day SMA near 0.6387 becomes the key upside barrier holding the gates for the further rise towards 0.6400. Alternatively, sellers will look for entries below the March-end top surrounding 0.6215.

 

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