Forex Trading

A stronger-than-expected US retail sales for December has led market participants to wonder if they have gotten ahead of themselves in pricing for a March rate cut.

Asia Open

Asian stocks look set for a mixed open, with Nikkei -0.13%, ASX -0.53% and KOSPI +0.47% at the time of writing. Sentiments in the region largely tracked the downbeat handover from Wall Street, as consumer resilience in the US called for some recalibration in Fed rate expectations, which drove Treasury yields higher as a near-term headwind for risk appetite.

Chinese equities continue to see more shunning from investors, with the Nasdaq Golden Dragon China Index down 2.6% overnight as China’s economic data revealed a challenging growth environment despite the series of stimulus efforts. A break below the 16,000 level for the Hang Seng Index (HSI) unlocked fresh selling yesterday, with the October 2022 low at the 14,600 level on watch for a retest over the coming weeks.

This morning’s economic calendar brought an unexpected contraction in Australia’s employment (-65.1k versus +17.6k consensus), but unemployment rate held steady at 3.9%, partly due to a decline in participation rate. Coming off the back of two previous months of strong read, the latest data may prompt the Reserve Bank of Australia (RBA) for more wait-and-see to establish clarity over the trend of labour conditions ahead.

The mixed readings triggered an initial dip lower for AUD/USD, but dip buyers were quick to jump in to defend the 0.652 level. This is where a support confluence stands with the lower edge of its Ichimoku cloud on the daily chart, along with its 100-day MA. Failure to hold the 0.652 level may potentially pave the way to retest the 0.638 level next.

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