Australian Dollar, AUD/USD, Natural Gas, Japan trade balance – Talking Points
- Australian Dollar falls overnight after US economic data charges USD
- Natural gas surges in Europe and US on Nord Stream 2’s fresh regulatory woes
- AUD/USD’s upbeat outlook fades after prices drop overnight, November low eyed
Wednesday’s Asia-Pacific Forecast
The Australian Dollar is slightly lower against the US Dollar moving into the Asia-Pacific trading session. AUD/USD was up overnight, but upbeat US economic data sent the Greenback higher along with Treasury yields. The 5-year note’s rate hit a fresh yearly high at 1.282%. Retail sales in the United States crossed the wires at 1.7% m/m versus an expected 1.5%. That cooled concerns that higher prices were tempering consumption. Technology stocks gained on Wall Street, with the Nasdaq 100 index closing 0.75% higher.
Meanwhile, natural gas prices surged during European trading hours after Germany suspended regulatory efforts to clear a gas pipeline from Russia. The highly-controversial Nord Stream 2 pipeline is already completed but hasn’t been put into service. Germany says the pipeline builder hasn’t dedicated sufficient assets and resources to its German-based subsidiary. A company spokesperson said they would comply, according to a WSJ report. However, it’s not clear at this time how long it will take to restart the certification process.
Oil prices fell overnight, with the WTI benchmark slicing below the critically important 80 handle. The drop comes amid reports of rising US production – particularly in the Permian Basin. The stronger US Dollar may have also worked to drag down prices. Gold and silver also fell in the commodities space. Energy traders are still awaiting word on a possible withdrawal from the US Strategic Petroleum Reserve (SPR).
This morning saw Japan’s October trade balance cross the wires along with machine orders for September. Japan’s trade balance rose to –¥67.4 billion from –¥624.1 billion, beating the consensus –¥320 billion forecast, according to Bloomberg data. September’s core machine orders missed expectations at 12.5% on a year-over-year basis.
Elsewhere, Australia will report its Q3 wage price index along with a leading index figure from Westpac. The wage price index is expected to rise 2.2% y/y. A better-than-expected print may see some AUD upside owing to an impact on RBA rate hike bets. Yesterday’s RBA minutes didn’t offer any surprises, but the central bank is forecasting higher inflation.
AUD/USD Technical Forecast
AUD/USD fell overnight, taking back the bulk of gains made from the prior two sessions. The bullish outlook from last week’s Bullish Engulfing candlestick is quickly evaporating. A break below the November low at 0.7276 would likely open the door for more downside, but bulls may defend the level if prices continue to fall.
AUD/USD Daily Chart
Chart created with TradingView
— Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @FxWestwateron Twitter