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AUD/USD Current Price: 0.7490
- Crude oil tumbles on US announcements oversupply of 180 million barrels from strategic reserve over the next six months.
- US core PCE inflation rises to 5.4% YoY in February.
- AUD/USD bears move in ahead of Nonfarm Payrolls.
The AUD/USD pair has been under pressure on Thursday as commodity prices take a raincheck. Hopes from earlier this week that peace talks would lead to a ceasefire in Ukraine five weeks after Russia's invasion have dwindled, yet, oil prices are under pressure due to the US announcing they will release up to 180 million barrels of oil from their strategic reserve over the next six months in an effort to combat the surge in oil prices. As a result of the Russian invasion of Ukraine, oil spot prices had rallied from around $75/bbl at the start of 2022 to a peak of above $130/bbl, but in the wake of the US announcement, oil prices were down over 5% overnight, with WTI trading at USD99.69bbl the low on the day.
Additionally, US stocks were poised to end the biggest quarterly decline in two years on a down note on Thursday as worries about the continuing conflict in Ukraine. AUD is a high beta currency, correlated to equities that have been sensitive to any signs of progress toward a deal to resolve Russia's invasion of Ukraine.
Meanwhile, US personal spending rose, as expected, by 0.6% in February from 0.5% in the previous month, the Bureau of Economic Analysis said. The year-over-year rate jumped to 6.4%, the steepest in a month since 1982, from 6% in January. This is US Federal Reserve's favoured inflation measure, the PCE deflator, and it has lifted to 6.4% YoY in February (6.0% previously), in line with expectations. Core inflation rose to 5.4% YoY (5.2% previously). The PCE is the broadest measure of inflation and it is running at three times the Fed's target rate, feeding into US dollar bullishness ahead of Friday's Nonfarm Payrolls. Employment in the US likely continued to advance in March following two strong reports averaging +580k in Jan and Feb and a new drop in the unemployment rate to a post-COVID low would be expected to support the greenback further.
AUD/USD short-term technical outlook
The daily chart shows that the price is under pressure below a wall of resistance. This puts the focus on the downside and to the prior resistance that has a confluence with the 50% mean reversion target. The 21-day moving average is aligned in this area as well for additional confluence.
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