- AUD / USD has managed to rally from session lows at 0.7080 to return above 0.7100.
- But the pair remains bearish for the day amid risk aversion due to Omicron concerns, which will be a key driver this week.
- Operators will be on the lookout for the release of the RBA Minutes on Tuesday.
The AUD/USD it continues to trade bearish for the day, with the pair currently down around 0.2%, although it has managed to bounce from session lows from 0.7080 and returned above 0.7100 in recent trading. 0.7100 has been a decent support zone for the past few weeks and a break below it this week could open the door for a move down towards yearly lows at 0.7000.
Concerns about the economic impact of the rapidly spreading Omicron – Covid-19 variant amid news of lockdowns in Europe (the Netherlands announced a full lockdown and other countries may follow suit) have been weighing on confidence and prices of Commodities are decisively lower, which is a double whammy for the risk-sensitive / commodity Aussie. The issue of Omicron and lockdowns will continue to be the main driver of risk appetite for the rest of the week (and the year), amid declining liquidity conditions due to the proximity of the Christmas and New Years celebrations. New. Afterwards, there will be no key macroeconomic data until the new year, although traders will be on the lookout for Tuesday’s RBA Minutes and Thursday’s core US PCE inflation data for November.
Regarding the former, traders will look for more clues from the RBA and pay extreme attention to the tone of their statements. It seems to be quite a consensus view now that the bank will completely phase out its QE program in February in the wake of last week’s much stronger-than-expected Australia’s November labor market report. The timing of the rate hike is also a key issue, with markets expecting the RBA at some point to indicate that a first post-pandemic hike could come as early as 2022 rather than the current guidance for 2023.
Looking at this week’s core PCE inflation data, which is the Fed’s favorite inflation gauge faced by U.S. consumers, they should confirm that inflationary pressures increased in November, as the consumer price inflation report indicated. The last week. One factor weighing on AUD / USD on Friday was aggressive comments from Fed Board of Governors member Christopher Waller, who said the March meeting was “set up” for a first rate hike.
Technical levels
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