China COVID and US inflation fears return
AUD/USD => The currency falls towards 0.68
Twitter => The stock falls 4% pre-market
S&P500 => The index falls below 4000
AUD/USD falls, China’s COVID cases in focus
AUD/USD gained 0.6% in the previous week after the RBA hiked interest rates by 50 basis points taking the rate to 1.35%. This was the first time in history that the central bank has raised rates by 50 basis points at consecutive meetings. The AUD also received a lift from news of a $200 billion stimulus program in China and managed to gain despite base metals coming under pressure across the week. Over the week Chinese data showed that inflation in the region rose by more than expected to a two-year high but remain muted compared to Europe and the US. While consumer prices rose, producer prices fell for an 8th straight month. Meanwhile, a new COVID outbreak in China has fueled lockdown fears. Looking ahead Australian business confidence data is due. Later in the week Australian jobs data and Chinese GDP will be in focus.
|China CPI||Actual: 2.5% (0.6)||Previous: 2.1%|
Where next for AUD/USD?
AUD/USD has fallen over 4% from its early June high of 0.7283, falling to a 2022 low of 0.6760. The price has attempted to pick up off this low stalling at 0.6850. The RSI continues to support further downside. Sellers will look to break below 0.6760 the 2022 low to create a lower low, opening the door to 0.67 round number. Buyers will look for a move over the 20 sma at 0.69 to mount s fur5ther move higher towards 0.6965 the June 28 low and then expose the 50 sma at 0.70.
Twitter fell 5% on Friday. Here’s why.
Twitter fell 5% on Friday and trades a further 4% lower pre-market as Tesla chief Elon Musk wishes to withdraw from the $44 billion Twitter deal. Musk cited concerns over the number of spam accounts on the social media platform as the reason and failure to consult with Musk over recent senior management firings. Twitter’s chairman said that they intended to pursue legal action to enforce the merger agreement. A case could be filed in Delaware as soon as today. A judge could compel Musk to buy the company for the previously agreed price. Alternatively, Twitter could seek $1 billion break fee allowing Musk to walk free.
S&P500 falls after NFP gains & ahead of inflation data
The S&P has started Q3 on the from foot, rising 3% across the previous week. Better than expected service ISM and non-farm payroll data helped boost sentiment and calm recession fears. The non-farm payroll showed that the US jobs market remains strong defying concerns of a recession. The unemployment rate held steady at 3.6%. Today, S&P futures are heading lower ahead of comments from Federal Reserve policymaker Williams. However, the main focus of the week will be on Wednesday’s CPI data which is expected to show that inflation is still rising.
|US Non-farm payroll||Actual: 372k (18k)||Previous: 390k|
Support can be found at 3800 (20 sma) and 3750 (July low).
Resistance for the pair can be seen at 3900 (round number) and 3950 (50 sma).