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AUD/USD as a potential catalysts at sight

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The AUD/USD pair has continued to consolidate gains, spending a second consecutive week above 0.7700 but failing to push over 0.7800. The commodity-linked currency had solid reasons to run, but speculative investors preferred to wait for a better image of the greenback.

Base metals such as copper and palladium have recently achieved new highs amid widespread optimism about a worldwide post-pandemic economic recovery. Developed economies, like the United States and Australia, are seeing the light at the end of the tunnel. Stocks and gold prices, on the other hand, were unable to reflect the upbeat attitude, moving modestly lower on a weekly basis, limiting the aussie’s prospective gains. 

Meanwhile, the US Federal Reserve held a monetary policy meeting this week, and while some analysts branded it as “dovish,” it was more of a wait-and-see. 

Fed Chair Powell struck a mix between caution about the threat of a pandemic and optimism about economic gains. 

The US dollar has reasons to gain, but it is also on pause, awaiting a better picture and more confirmation from macroeconomic numbers.

The data released by the United States was mainly positive. The CB Consumer Confidence Index increased to 121.7 in April from 109 in March, much above market forecasts. Weekly jobless claims were 553K, falling short of estimates but still around the lowest level since the epidemic began, indicating that the labour market is on the mend. Durable Goods Orders were the exception, increasing by a modest 0.5 percent in March. 

Finally, personal spending increased by 4.2 percent in March, the quickest rate in nine months, while personal income increased by 21.1 percent. Core PCE inflation, the Fed’s preferred gauge, came in at 1.8 percent, as expected by the market.

Australia, on the other hand, had nothing to give and produced mediocre results. The quarterly Consumer Price Index shrank to 0.6 percent from 0.9 percent in Q1, falling short of the market’s forecasts, while the RBA Trimmed Mean CPI for the same time came in at 0.3 percent. In the same time, the Producer Price Index rose by 0.4 percent, somewhat more than the 0.3 percent projected. 

The market may have a better idea of where the Australian economy stands in the coming days. The country will begin the week by releasing the April manufacturing indices and the April TD Securities Inflation. 

The RBA will publish its Monetary Policy decision on Tuesday, while central bankers are anticipated to keep the present policy on hold. Australia will also provide updates on the Services PMI and housing-related indicators throughout the week.

The official ISM PMIs for April will be released on the US macroeconomic calendar, and they are expected to reflect continued economic expansion. Starting on Wednesday with the ADP survey on private job creation and finishing on Friday with the Nonfarm Payrolls report, the spotlight will be on employment-related statistics. 

The country is estimated to have gained 926K new jobs in April, with the unemployment rate falling to 5.8 percent from 6 percent the previous month. 

In the long run, the AUD/USD pair is technically neutral, with a modestly positive potential. 

The Momentum indicator is around its midpoint, and the RSI is at 60, indicating that there is no selling interest. 

On a daily basis, the pair continues to oscillate between gains and losses. 

It remains above bullish moving averages, with the 20 and 100 SMAs converging around 0.7700, but technical indicators continue to lose strength inside favourable levels.

If the price breaks below the 0.7690 support level, a corrective slide is possible, with the next levels to watch around 0.7600 and 0.7531. To the upside, the pair must go over 0.7820 in order to extend its gains toward the 0.7900 level. 

The AUD/USD pair will prolong its consolidative phase in the next weeks, according to a Forecast Poll. The pair is expected at 0.7737 on a weekly basis on average, as the number of bulls equals the number of bears. The monthly and quarterly perspectives are dominated by bears, although the pair is projected to remain at present levels.

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