Australian Dollar, Westpac Consumer Confidence, AUD / USD, Covid – Talking Points

• Asia-Pacific markets are muted as traders brace for hard-hitting economic data
• Australia set to ease lockdowns, but possible travel bubble could be in the works
• AUD / USD hovers around 20-day SMA as pair tries to break triangle resistance

Wednesday’s Asia-Pacific Outlook

Asia-Pacific markets could experience a muted opening on Wednesday as several potentially high-impact economic events approach. On Wall Street, traders seemed reluctant to choose a direction, with the benchmark S&P 500 closing almost unchanged at + 0.02% on Tuesday, although small-cap stocks outperformed. The US dollar, a safe haven, strengthened slightly against a basket of its main FX peers.

Traders are bracing for US inflation numbers expected to cross the wires later this week as the economic impression has the potential to send shockwaves through global markets. According to DailyFX Economic Calendar, analysts expect core inflation – the Federal Reserve’s preferred measure, which excludes volatile items like food and energy prices – to cross the line at 3.4% on an annual basis for May.

Today’s trading session will see Australian Westpac consumer confidence for June cross the wires. As last month’s impression fell from its highest level since September 2010, Australian consumers should remain confident as Covid restrictions continue to ease and cross-border travel further intensifies. A strong Westpac figure could support the Australian dollar in the short term.

Speaking of Australia, the Victorian government is expected to ease lockdown measures later this week, unless no unexpected Covid cases arise. However, the Sydney Morning Herald reported, according to an anonymous source, that a 25-kilometer bubble will be placed for travel on Melburnians. Details are expected to be released later today, but the expected restrictions will ban travel during the Queen’s birthday holiday.

Crude oil prices rose overnight, closing above 70 for the first time since October 2018, as traders continued to bet on the global economy reopening. The U.S. Energy Information Administration (EIA) will release inventory figures tomorrow, with an expected drawdown of 3.5 million barrels for the week ending June 4, which would be the third consecutive weekly drop in oil levels. stock.

Elsewhere, New Zealand reported first-quarter manufacturing sales at 4.2% for the first quarter. ANZ Business Confidence for June will follow later today for the island nation. China will release inflation figures for last month, which could spur a move in the yuan, or perhaps broader sentiment if a shortage or outsized beat occurs. Consensus expects a 1.6% increase year-on-year.

Speaking of China, the United States on Tuesday evening passed a bipartisan bill to strengthen its competitive advantage over China, targeting computer chips, military hardware and space exploration. U.S. innovation and competition law is likely to fuel the lingering tensions between the world’s two largest economies. The bill must now pass through the lower house of Congress before going to President Joe Biden’s office.

AUD / USD technical outlook:

The Aussie is struggling to cross the upper bound of a descending triangle as it hovers around the 20-day Simple Moving Average (SMA). The 38.2% Fibonacci retracement level also appears to provide a level of contention. Both MACD and RSI oscillators are trending neutral, but the 50-day SMA appears to be heading for a possible bullish cross above the 20-day SMA.

AUD / USD daily chart

Chart created with TradingView

Australian Dollar TRADING RESOURCES

— Written by Thomas Westwater, Analyst for DailyFX.com

To contact Thomas, use the comments section below or @FxWestwateron Twitter