AUD/USD trading in narrow 0.7564/92; markets get set for the FOMC

Currently, AUD/USD is trading at 0.7567, down -0.05% on the day, having posted a daily high at 0.7575 and low at 0.7566.

AUD/USD has been consolidating as markets get set for the FOMC this week. There was a sell-off in the dollar that caught the market off guard after the nonfarm payrolls report failed to support the greenback. However, the data was robust and in line with what was required for the Fed to hike rates this week. The downside in the data was that certain trends may not be supportive of a particularly hawkish statement or rhetoric from Yellen and thus expectations for a faster pace of tightening have dwindled hence softer dollar. The profit taking that ensued enabled the Aussie to climb as high as 9 pips below the psychological 0.76 handle. AUD/USD has been consolidated since in a narrow range between 0.7564/92. 

AUD/NZD: resuming the multi-week rally targeting 1.1050 area - ANZ

For the day ahead, we have the Feb NAB business. This survey surprised to the upside in Jan with business conditions rising to +16 – a high reading relative to its +5 average. Analysts at Westpac expect that Feb should pull back from current multi-year highs. We also have data from China, including, retail sales, Feb fixed asset investment and Feb industrial production.

Forex today: dollar stable and US yields rise

 AUD/USD 1-3 month:

Analysts at Westpac expect the Aussie to move lower to 0.7400. "The Fed’s assertive tightening bias plus US fiscal expansion should maintain upside pressure on US interest rates and the US dollar. Against that coal and iron ore are likely to sustain a good portion of their dramatic rises, and economic data for Q4 and Q1 should improve, but these forces are subservient to the US dollar’s trend. Australia’s AAA rating will remain an issue into the May budget, (23 Dec)."

AUD/USD levels

AUDUSD: Heading up to a high of 0.7591

Valeria Bednarik, chief analyst at FXStreet explained that the short-term picture is bullish. "although 0.7600 remains as a tough bone to break, as the level has turned into a major resistance after being support for most of past February." In the 4 hours chart, she explains that the technical indicators have lost their upward strength, but remain near overbought readings, whilst the 20 SMA is slowly turning higher far below the current level, now around 0.7535, indicating a limited downward scope."