Australian Dollar, AUD/USD, China, HSI, CSI 300, BoJ, Ueda, USD/JPY, Euro – Talking Points
- The Australian Dollar nudged north on Monday on improving risk appetite
- China cut the cost of transacting on stocks but then put the brakes on its IPO market
- With Jackson Hole out of the way, markets might look to the data for volatility
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The Australian Dollar found firmer footing to start the week with market sentiment improving after China took further measures to bolster the domestic equity market.
China’s Ministry of Finance announced that stamp duty on stock trades would be halved from 0.1% to 0.05%.
In addition and in a somewhat peculiar announcement, China’s Securities Regulatory Commission announced that the pace of IPOs will be slowed.
Hong Kong’s Hang Seng Index (HSI) and the mainland CSI 300 indices roared over 2% higher. The rest of APAC equity markets are a sea of green with Japan’s bourses notching up some solid gains.
Over the weekend Bank of Japan Governor Kazuo Ueda said, “We think that underlying inflation is still a bit below our target, this is why we are sticking with our current monetary easing framework.”
The confirmation of his dovish tilt also saw USD/JPY climb towards a 10-month high to start the week.
Also speaking at the Jackson Hole symposium, Fed Chair Jerome Powell reiterated his view that rates will be high for a long time and that another hike can’t be ruled out if the data warrants it.
European Central Bank (ECB) President Christine Lagarde also raised her concerns about inflation but was less prescriptive about the rate path. A series of European CPI readings will be released this week and could provide a catalyst for moves in EUR/USD.
Elsewhere, US Commerce Secretary Gina Raimondo is visiting China this week as both countries appear willing to heal the rift. Repairing trade relations is the focus of the talks.
The WTI futures contract is near US$ 80 bbl while the Brent contract is trading around US$ 84.50 bbl at the time of going to print. Spot gold is steady near US$ 1,915 an ounce.
Looking ahead, it is mostly second and third-tier data due out today and all the details for the full economic calendar can be viewed here.
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AUD/USD TECHNICAL ANALYSIS SNAPSHOT
AUD/USD has consolidated to start the week and has failed to close below an ascending trend line.
Although it has traded a couple of times below it, it is yet to close under it. That may suggest that it might remain intact for now.
Stepping back though, it is still in a descending trend channel. To learn more about trend trading, click on the banner below.
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On the downside, support may lie at the breakpoints and previous lows of 0.6386,
0.6365, 0.6272 and 0.6170.
The latter might also be supported at 161.8% Fibonacci Extension level at 0.6186. To learn more about Fibonacci techniques, click on the banner below.
Nearby resistance could be at the breakpoints near 0.6460 ahead of a cluster of breakpoints and prior peaks in the 0.6595 – 0.6615.
Chart created in TradingView
— Written by Daniel McCarthy, Strategist for DailyFX.com
Please contact Daniel via @DanMcCarthyFX on Twitter