- AUD/USD remains indecisive after reversing from two-week top.
- Market sentiment dwindles amid a light calendar but bears have the upper hand.
- Fed rate hike chatters, China news and Omicron updates are important too.
- US inflation expectations snap four-day rebound ahead of CPI release.
AUD/USD seesaws inside a 10-pips trading range surrounding 0.7150 during Friday’s Asian session.
The risk barometer pair portrays the market’s cautious mood ahead of the key US inflation data. The mixed catalysts and light calendar add to the trader’s indecision.
Having snapped a three-day uptrend the previous day, the US 10-year Treasury yields remain lackluster around 1.487% at the latest. Also portraying the sluggish markets is the S&P 500 Futures that rise 0.10% while the Wall Street benchmarks closed in the red.
A Japanese study saying Omicron is four-time more transmissible than the other covid strains join the return of virus-led lockdowns in Europe and the UK, as well as protective measures in parts of the US, to renew COVID-19 fears. On the contrary, global policymakers followed scientists suggesting three vaccine shots as effective against the virus variant.
On a different page, major setbacks for the Beijing Olympics 2022 join rating giant Fitch’s negative comments over China’s Evergrande and Kaisa to mark challenges for Australia’s largest customer, namely China.
Additionally, the US support to Ukraine in a tussle with Russia and the Washington-Israel talks to convey Tehran’s diplomacy also challenge the risk appetite.
It should be observed that the US Initial Jobless Claims dropped to the lowest levels since 1969, 184K versus 215K expected and 227K forecast. This helps major US banks, including Goldman Sachs, JP Morgan and Morgan Stanley to push for more rate hikes during 2022 and 2023.
Moving on, a lack of major data/events in Asia and the importance of today’s US Consumer Price Index (CPI) for November ahead of next week’s Federal Open Market Committee (FOMC) meeting will keep AUD/USD traders on the sidelines. It should be observed that the US inflation expectations, as measured by the 10-year breakeven inflation rate per the St. Louis Federal Reserve (FRED) data, snap four-day recovery from early October lows while easing to 2.47% for Thursday, signaling odds of a negative surprise for the Fed hawks.
Read: US Consumer Price Index November Preview: Inflation is the new cause celebre
Technical analysis
Although 21-DMA joins September lows to challenge AUD/USD bulls, a clear upside break of 10-DMA and descending trend line from early November keeps buyers hopeful. Also favoring the bulls is the RSI recovery from oversold territory.
However, fresh buying seems to wait for a fresh weekly high of 0.7188, while also successfully crossing the 21-DMA level surrounding 0.7180.
Meanwhile, pullback moves remain elusive beyond the previous resistance line near 0.7090, a break of which will open the door for 0.7045 and the 0.7000 support levels.