Much like the rest of the G10 FX space, the Australian Dollar has struggled for direction with the recent uptrend beginning to stall at 0.78. Risk sentiment has eased slightly thus pushing the Aussie back to the mid-77s. However, with Fed Chair Powell re-enforcing comments made by the majority of the committee by downplaying talks of tapering QE purchases the threat of spiking higher rates may have cooled for now in the short-term. On the downside, support is situated at 0.7680-0.7700 with a move below opening the doors to 0.7643 (YTD low) making for a more meaningful pullback. 

AUDUSD D1 01 15 2021 1623

Looking ahead to next week, initial focus will be on Chinese GDP, which is expected to print at 6.1% Y/Y with a Q/Q reading of 3.2%. On the domestic front, theAustralian Labour market report will be the key risk event for the Aussie, where the jobs markets is expected to continue its recovery, particularly after the December job ads, thus expectations are for the unemployment rate to dip slightly to 6.7%.

Spot Gold 20210107 19.40

The daily gold chart is now flashing a couple of negative signals that need to be closely watched. A potential ‘death cross’ where the 50-dma trades down through the 200-dma is close to being formed and warrants attention, while yesterday’s bearish engulfing candle also suggests lower prices ahead.

 

 

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The Australian Dollar has enjoyed recent gains against many of its major counterparts as risk appetite drives demand for the grow-sensitive Aussie. AUD/NZD has been an exception since August, however, and the pair was locked in a downtrend until December. The final month of the year offered some respite for the Australian Dollar which saw AUD/NZD climb quickly from 1.0417 to the 200-day moving average just north of 1.0715. 

AUD NZD 20210104 16.40In conjunction with resistance offered by the 200-day moving average, AUD/NZD reveals waning momentum with a series of daily candles with long upper wicks. Further still, the recent formation of a death cross in mid-November could suggest the pair is vulnerable to a continuation lower. Levels of invalidation if bearish exposure is to be explored can be set above the nearby 200DMA the November high.

 

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The daily chart in on the established range with the incorporation of a mid-line as a reference point. The uncertainty around Brexit saw price action see-saw, moving above and below the mid-line with regular frequency.

Although a deal has been agreed, both nations are still in the early stages of operating under the new agreed terms and therefore, the true impact of the separation is still to play out and will be revealed in price action. In the absence of a clear discernable trend, price action may well continue to oscillate around the mid-line in the early days of 2021.

A break above the descending channel and above the midline brings into focus the 0.9160 level of resistance, while a bounce off of the upper trendline with increased selling momentum highlights the recent low of 0.8930. 

EUR GBP 20210105 17.45

 

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From a technical perspective, the benchmark Dow Jones Industrial Average (DJIA) could be at risk of a short-term pullback as prices carve out a bearish Rising Wedge pattern.

Bearish RSI divergence and a notable drop-off in volume hints that the recent topside push may be running out steam.

Failing to close on a daily basis above wedge resistance and the December 29 high (30502) could ignite a correction back towards the 21-day exponential moving average (29982) and wedge support.

Wall Street 20201230 12.57

Alternatively, pushing past the 30500 mark would likely signal the resumption of the primary uptrend and bring psychological resistance at 31000 into the crosshairs.
A bearish crossover on the MACD indicator, in tandem with the RSI dipping sharply back below 60, suggests the path of least resistance may be lower.

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