The Greenback remains under pressure on Friday, particularly against antipodean currencies, which are outperforming. While the RBA and Bank of Canada have raised rates, expectations are that the Federal Reserve (Fed) will hit the pause button next week. At the same time, an improvement in market sentiment is also helping to boost demand for the AUD and NZD.
On Friday, China reported that the Consumer Price Index rose 0.2% YoY, and the Producer Price Index was at -4.6% YoY. The numbers show that the impact of the reopening remains limited. Low inflation numbers keep the door open to more stimulus from Chinese authorities.
Best Week In Months For The Aussie
The RBA’s rate hike and Governor Lowe’s comments about persistent inflation testing the board’s patience boosted the Australian Dollar. Risk-on flows and technical factors fuel the AUD/USD rally. Weak data from China was mostly ignored.
The AUD/USD has risen almost 150 pips during the week, marking its best performance since January. The price is currently testing the 20-week Simple Moving Average (SMA), and a clear close above it would suggest that more gains are on the table. In the daily chart, the AUD/USD tests the 100-day SMA and consolidates above the 0.6715/20 resistance area.
The technical outlook for the Aussie is positive. However, the main risk could come from a reversal in risk flows and a hawkish surprise from the Federal Reserve next week.