AUD/USD, ASX 200 Analysis: Asian Open 19th June 2023

Market summary

• The USD index fell for a third week, which was its worst week since early January, helping EUR/GBP and GBP/USD post their strongest weekly gains since November, and AUD/USD and NZD/USD rally for a third week
• Although momentum was lost on Friday with spinning top Doji’s forming on Friday for several FX majors
• The BOJ held their monetary policy unchanged on Friday, helping to send USD/JPY to a 6-week high and close just shy of 142
• It’s a US public holiday on Monday and a quiet economic calendar in Asia and Europe today, so we may find volatility to be on the lower side
• Australia’s 10-3 year yield curve inverted last week for the first time since 2008, which suggests bond markets are now pricing in a recession
• The Michigan consumer sentiment index showed a lift in morale, whilst 1 year CPI expectation fell to a 15-month low of 3.3% and the 5-year pulled back to 5%
• USD/CAD fell to its lowest level since September, Oil rose for a third day and higher for 3^rd day and is potentially eyeing a break above 72.0.
• Gold has mostly ranged between 1935 – 1970 this month so far, with a false break below 1930 on Thursday seeing strong buying volumes send gold back to the top of the range
• View a snapshot of market positioning from CME’s weekly COT report (commitment of traders) using percent rank to scale poisoning of the past 3 year, 1 year and 3-month timeframe

Events in focus (AEDT):

• View upcoming events and themes for the week: The Week Ahead
• 08:30 – New Zealand PSI (performance of services)

ASX 200 at a glance:

• The ASX 200 rallied for a fifth day
• Strongest day’s rally in 9 weeks
• Wall Street delivered a strong lead which could help support the ASX today
• However, trend resistance, upper Bollinger band and 7300 handle are nearby as potential resistance levels

AUD/USD 1-hour:

Given the lack of economic news scheduled, we may find that prices remain within Friday’s Doji range without a fresh catalyst to drive sentiment. However, the 1-hour trend remains bullish so we prefer to seek bullish setups at or around support levels.

Prices have gapped up at the open and are holding above the daily pivot point, so perhaps we’ll see another creak at Friday’s highs. Should the gap be filled and continue lower, we’d seek bullish setups around the daily S1 / Friday’s low for mean reversion towards the daily pivot point. Next support resides around the daily S2 pivot / 0.6835 high.

If the gap holds, the next area for bulls to consider is the daily R1, just beneath Friday’s high. A break above which brings the daily R2 into focus, near the February VPOC (volume point of control).

Asia Data Calendar (AEDT):

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge