AUD / USD Rises With Iron Ore As Westpac Consumer Confidence Looms
Wall Street, Australian Dollar, Westpac Consumer Confidence, AUD / USD – Talking Points
- Asia-Pacific markets come under pressure after Wall Street losses
- Market Looks at Westpac Consumer Confidence in Australia
- AUD / USD faces psychological resistance as the pair rises
Wednesday’s Asia-Pacific Outlook
Asia-Pacific markets may retreat from gains seen on Tuesday after a volatile session on Wall Street. The S&P 500 Index caused losses among the major indexes, while the VIX ‘fear gauge’ rose above the 20 handle. The benchmark 10-year Treasury yield saw moderate buying, pushing the the note yielded to nearly a percentage point.
The Australian dollar may see movement on the Westpac Consumer Confidence Index for May, which is due out at 12:30 GMT. The previous month’s reading crossed leads at 118.8, the third consecutive monthly move higher. The Australian dollar could strengthen if the trend of improving consumer confidence continues. AUD / USD strengthened overnight after the Reserve Bank of Australia (RBA) report on Tuesday.
Rising prices throughout the economy, particularly in the commodities area, helped dampen the underlying fundamental strength of the Australian dollar. Iron ore – one of Australia’s top exports – extends gains from the previous session, with the industrial metal eyeing its recent high. Pandemic-fueled stimulus spending has helped push industrial metals to multi-year highs as governments focus on job creation initiatives like infrastructure. China is perhaps the main driver of imports.
However, political tension between Australia and China throws a potential question mark in the commodity rally, Beijing’s economic planning agency, National Development and Reform Commission (NDRC), declaring the need to diversify its supply chains for metals and other resources, according to Bloomberg News. Either way, diversifying supply chains when it comes to industrial metals is no small feat, and it will likely take China years, if not decades, to achieve this goal in any meaningful way. .
Elsewhere, crude oil prices have fallen as reports cross the threads that significant progress in reviving the US-Iran nuclear deal could be announced shortly. The deal, which was canceled during former President Donald Trump’s tenure, would likely see Iran re-enter the global energy market, increasing supply and putting pressure on prices in turn.
AUD / USD technical split
AUD / USD is facing an old psychologically imposing handle resistance area of 0.78 after rising overnight. A break above the level would see recent highs come to the fore soon after. Alternatively, a move lower may see support at the 0.7750 level with the 50 day simple moving average falling below the key level.
AUD / USD daily chart
Chart created with TradingView
AUD / USD TRADING RESOURCES
— Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @FxWestwateron Twitter