Australian Dollar Prepares for Chinese Inflation and Factory Gate Prices Data

Australian Dollar, AUD/USD, China PPI and CPI, Oil, Technical Outlook – Talking Points

• Australian Dollar gained versus US Dollar overnight as equity upside cools
• China set to report consumer inflation and factory gate prices for November
• AUD/USD testing resistance from September swing low as rebound continues

Thursday’s Asia-Pacific Forecast

Asia-Pacific markets may take a step back today after Wall Street showed signs of stress following the prior day’s massive rally. Omicron strain fears continue to put a question mark over markets, although reports show that a booster vaccine is likely enough to provide protection against the new strain. The Dow Jones Industrial Average (DJIA) gained 0.10% while volatility dropped via the VIX index. AUD/USD gained for a third session as US Dollar strength eased.

Crude oil prices rose after the Energy Information Administration reported a reduction in oil stocks for the week ending December 3. However, inventory at Cushing Oklahoma, a major US storage hub, rose by over 2 million barrels, which was the largest build since February. The large inventory boost may put overhead pressure on prices over the next few months.

Today will see Chinese inflation and factory gate prices cross the wires. Last month, factory gate prices via the producer price index (PPI), surged to its highest level in nearly 30 years at 13.5%. Analysts expect that measure to fall to 12.4%. The consumer price index (CPI), which measures inflation, is seen rising to 2.5% from 1.5%, according to a Bloomberg survey. A higher-than-expected figure could spur broader global inflationary concerns, which could drive bond yields higher.

This morning, New Zealand reported a 6.2% drop in third-quarter manufacturing sales on a year-over-year basis. That was well below the 18.8% increase seen in the prior quarter. NZD/USD gained overnight, but prices appear to be trimming gains into Thursday’s APAC session. Later today, the Philippines will see industrial production data for October hit the wires.

AUD/USD Technical Forecast

AUD/USD put in its third consecutive daily gain, with prices gaining over 0.5% overnight. The September swing low at 0.7170 appears to be offering some resistance after an intraday move was pushed back below the level. MACD crossed above its signal line, a bullish sign.

Meanwhile, the RSI oscillator continues to move higher after breaking out from oversold conditions. A break above the September swing low would likely see prices test the falling 26-day Exponential Moving Average (EMA).

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