Risk sentiment falters and the USD rally resumes
AUD/USD => The index rises after six days of losses
BTC/USD => The cryptocurrency falls below 19k
EUSTOXX50 => The index falls to 3300
AUD/USD falls further despite upbeat retail sales
AUS/USD is falling for a fourth straight session. The pair fell 0.3% yesterday as risk sentiment faltered, hurting demand for the riskier commodity currency. Meanwhile, the USD benefitted from stronger than forecast consumer confidence suggesting that the US consumer will keep spending, and more hawkish Fed comments. Today, the pair continues to decline despite higher-than-expected Australian retail sales, which indicates that the Australian consumer is comfortably absorbing fast interest rate hikes. Instead, the dismal market mood is once again hurting the Aussie. The USD is rising as attention shifts to pending home sales and a speech by Federal Reserve Chair Powell, who could provide further clues over what the Fed will do next.
| US consumer confidenceAus. Retail sales | Actual: 108 (4.8) Actual: 0.6% (0.7%) | Previous: 103.2 Previous: 1.3% |
Where next for the AUD/USD?
AUD/USD falls below a multi-month falling trendline, dropping to a 28-month low. The RSI has fallen into oversold territory, so caution should be taken when placing short positions. Sellers could look towards 0.63 round number, with a break below here opening the door to 0.6250, the April 20, 2020 low, ahead of the 0.62 round number. Buyers could look towards 0.65, the falling trendline resistance ahead of 0.6680, the July low.
BTC/USD falls with risk assets
After briefly spiking over 20k to a high of 20,300, Bitcoin is again trading on the back foot, at 18,800 at the time of writing. This was the first move over 20k in nine days, but the bulls could not defend the key psychological level as inflation, and recession fears again soured the market mood, sending risk assets southwards. Stronger than forecast US durable goods orders and consumer confidence raised concerns that the Fed could be prepared to hike rates more aggressively to tame inflation, which increases the likelihood of a recession. In crypto news, FTX has won the bidding war with Wave Financial to buy bankrupt Voyager Digital, the crypto lender which went into bankruptcy in July.
EUSTOXX50 falls to a 2-year low
EuroStoxx50 is falling for a fourth straight day. The index declined 0.2% yesterday after Russia was accused of deliberately attacking its Nord Stream pipeline. The move sent European gas prices over 10% higher and signals that Europe will need to endure winter without Russian gas. Today the index is falling further amid a broad risk-off mood in the market as investors continue to fret over hawkish central bank moves and an impending recession. On the economic calendar, German consumer confidence is in focus and is expected to deteriorate further amid rising energy prices and the worsening cost of living crisis.
| Ger. consumer confidence | Expected: –39 (4.2) | Previous: -36.5 |
Support can be found at 3286 (2022 low) and 3216 (August ’19 low).
Resistance for the pair can be seen at 3350 (July low) and 3480 (20 sma).
