Australia just posted stronger-than-expected jobs data, while the US CPI came out much weaker than expected.
Can AUD/USD make more gains from here?
Before we go any further, ICYMI, Yesterday’s Watchlist checked the bullishness of AUD/NZD ahead of the Australian Employment Report. Be sure to check if it’s still playable!
And now for the main headlines that rocked the markets in the recent trading sessions:
Headlines and recent economic data for the market:
US headline CPI slowed from 0.4% m/m in February to 0.1% in March, below estimates of 0.2% and the annualized rate fell from 6.0% to 5.0%.
The Bank of Canada kept interest rates unchanged at 4.50% as expected for the second consecutive month, citing expectations of slowing inflation and growth.
Bank of Canada Governor McClim dashed hopes of a near-term interest rate cut, stating that it does not appear to be the most likely scenario at the moment.
The minutes of the FOMC meeting indicated that policy makers are considering keeping interest rates unchanged at the March meeting due to the nervous banking sector.
Minutes from the FOMC meeting also showed that Fed staff expect a moderate recession later this year from tightening credit conditions.
North Korea fires another ballistic missile, prompting the Japanese government to order evacuation on the island of Hokkaido
Bank of Japan Governor Ueda stressed at the G7 meeting that inflation is likely to slow, so it would be appropriate to maintain an easy monetary policy for the time being until the target is reached in a stable and sustainable manner.
The Australian economy added 53K jobs in March against an estimated gain of 20.8K and a prior increase of 63.6K, keeping the unemployment rate steady at 3.5% rather than rising to the 3.6% consensus.
China’s trade surplus narrowed from $116.9 billion to $88.2 billion in March versus the expected $40 billion, as exports surprised by up 14.8% year-on-year versus an estimated decline of 7.1%.
UK economic growth stagnated in February against an estimated expansion of 0.1% and a previous growth figure of 0.4%, as declines in services and production offset growth in the construction sector.
UK Industrial Production fell 0.2% m/m in February versus an expected rise of 0.2% and January’s rating also fell to show a 0.5% decline from an initially reported decline of 0.3%.
Price action news
The USD crosses were in consolidation mode ahead of the release of the US CPI, which then turned weaker than expected and triggered a bearish breakout across the board.
Dollar weakness appeared a bit more during the release of the FOMC meeting minutes, where the transcript revealed that some policy makers are considering keeping interest rates on hold and staff expecting a mild recession this year.
From there, the greenback has resumed its sideways price action, as traders are likely to await the release of PPI numbers today and retail sales data tomorrow.
Headline and fundamental US PPI headline at 12:30 PM GMT
US Initial Jobless Claims at 12:30pm GMT
Bank of Canada Governor McClim Speech at 1:00pm GMT
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AUD/USD 1-hour chart by TradingView
The Australian dollar got a fresh boost from the upbeat jobs data earlier today while the greenback remains weak.
Could this inspire an ascending triangle breakout for AUD/USD?
It all boils down to the outcome of the US PPI report, as a sharp drop in producer prices could signal that weaker consumer inflation is imminent.
If so, the pair can breach the top of the triangle near R1 (.6730.) and head up to R2 (.6760) and beyond.
On the other hand, strong PPI figures may keep alive hopes of a May rate hike and trigger a bearish triangle break for AUD/USD.
However, look for support at the pivot point near the key psychological level of 0.6700 and the short-term uptrend line.
Just be sure to account Average daily volatility for the AUD/USD pair 73.5 points when determining the entrances and exits!