Australian Dollar, AUD/USD, Energy Crisis, Reserve Bank of New Zealand – Talking Points
- Australian Dollar set to rise through APAC trading as sentiment heats up
- Energy crisis across Asia and Europe boosts need for coal and LNG products
- RBNZ in focus as its October rate decision nears, analysts expect a 25 bps hike
- AUD/USD takes aim at key moving average after rising above the 26-day EMA
Wednesday’s Asia-Pacific Forecast
Asia Pacific markets are set to open higher today following a rise in risk-taking overnight. Stocks on Wall Street rebounded from multi-month lows. Technology shares led the US market higher, with the Nasdaq 100 index closing 1.40% higher. The US trade deficit for August crossed the wires at $73.3 billion before the New York opening bell. Analysts expected a deficit of $70.8 billion, according to a Bloomberg survey. The risk-sensitive Australian Dollar is rising into the APAC open.
The Australian Dollar rose from solid economic data Tuesday when Australia’s August trade balance crossed the wires at A$15.07 billion versus an expected A$10.10 billion. Liquified natural gas (LNG) and coal products drove exports well above analysts’ targets, fueled by strong Asian demand. An energy crunch is pinching Asia, along with much of Europe, as prices for fuel products surge amid demand coming back online and ongoing supply bottlenecks in mining and shipping.
Australia is set to benefit from the impending energy crises seen throughout Europe and Asia. The Aussie economy is a primary exporter of coal and natural gas products. Trade data reveals a healthy uptick in export volumes for both products. Beijing is reportedly allowing small shipments of Australian coal to clear Chinese ports, underscoring the severity of the power strain. Beijing ordered a halt on Australian coal imports last year amid rising tensions between the two countries.
The Reserve Bank of New Zealand’s October rate decision will be today’s primary focus. The RBNZ is expected to deliver a 25 basis point rate hike, which will be the central bank’s first hike since the Covid pandemic started. Earlier this year, some analysts were expecting a 50 basis point hike to kick off the rate tightening cycle, although those bets eased as global headwinds picked up and ate into risk sentiment (see chart below).
Mainland Chinese stock and bond markets remain shuttered for China’s week-long holiday break. However, Hong Kong remains open and will see September PMI figures cross the wires. The Reserve Bank of Australia will release a chart pack, as it typically does following a rate decision. The RBA stood firm on Tuesday, keeping policy largely unchanged – as was expected.
AUD/USD Technical Forecast
AUD/USD is back above the 26-day Exponential Moving Average (EMA) after rising overnight. If prices manage to hold above the key moving average, the 50-day Simple Moving Average (SMA) is likely to provide another test for bulls. MACD is on the move higher, indicating healthy momentum, while the Relative Strength Index (RSI) gently treads upward as well.
AUD/USD 8-Hour Chart
Chart created with TradingView
— Written by Thomas Westwater, Analyst for DailyFX.com
To contact Thomas, use the comments section below or @FxWestwater on Twitter
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