Bearish view
Bullish view
- Set a buy-stop at 0.6365 and a take-profit at 0.6425.
- Add a stop-loss at 0.6290.
The AUD/USD exchange rate held steady after the latest RBA minutes and the strong economic numbers from the United States. The pair soared to a high of 0.6380, much higher than last week’s lowest swing at 0.6286.
Strong US economic data
The Australian dollar drifted upwards in the overnight session after a series of strong US data pointed to a hawkish Federal Reserve. In a report, the Commerce Department showed that consumer spending held quite well in September.
Precisely, the report showed that retail sales rose by 0.7%, better than the median estimate of 0.3%. This increase translated to a year-on-year growth of 3.75%, higher than August’s 2.89%.
Core retail sales rose by 0.6%, also higher than what analysts were expecting. These numbers mean that the economy is doing modestly well even as interest rates remained at the highest level in more than two decades.
Recent data shows that most Americans have drained their savings while the credit card delinquency rate has jumped to the highest point in years. Consumers are also dealing with high inflation and 8% mortgage rates.
The AUD/USD pair rose after data revealed that industrial and manufacturing production rose in September. Industrial production jumped by 0.3% from 0.0% in August while industrial output rose by 0.4%.
These numbers could put pressure on the Fed to act since inflation numbers were higher than expected. The headline consumer price index (CPI) rose by 3.6% in September, a small decline from the previous month’s.
The key driver for the AUD/USD pair on Wednesday will be the weak Chinese economic data and speeches by Fed officials like Christopher Waller, Michele Bowman, and John Williams. The US will also publish the latest housing starts and business permits data.
AUD/USD technical analysis
The AUD/USD exchange rate recovered from its lowest level this month as the US dollar rebound stalled. It has moved between the middle and the upper lines of the Donchian Channels.
The pair is also slightly above the important support level at 0.6358, the lowest swing on October 6th. It has moved slightly above the 25-period Arnaud Legoux Moving Average while the Relative Strength Index (RSI) has moved above the neutral point of 50.
Therefore, the outlook for the pair is bearish since it seems like bulls are getting exhausted. If this happens, it will first retest the support at 0.6300 followed by last week’s low of 0.6286.
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