AUD/NZD, US IMPEACHMENT, TREASURY YIELDS – KEY POINTS:
- The AUD/NZD action might continue with a bullish technical signal on the cards
- Treasury yields drop after a stronger auction demand on 3 decades bonds
- Wall street buyers unfazed by the impeachment proceedings in the House of Representatives
The US markets have ignored the impending political impact that surrounds the 2nd impeachment of President Trump yesterday. Nasdaq Composite climbed 0.43% while the S&P 500 index gained 0.23%. The small-cap stocks seem to have lagged the broad market, with the 0.75% drop in the Russell 2000 index. On the other hand, the Dow Jones index traded sideways and lost 0.10%.
Wall Street began a day with inflation data for last month that crossed wires over analysis anticipations, but the rose was mainly driven by high-energy prices. Also, the higher inflation wagers for the future continue as traders expect a pro-stimulus setting under president Joe Biden’s administration.
The Congress moved to impeach trump after the New York trading session started, accusing him of inciting an insurrection, even though the markets continued discounting the headlines. Initially, the Federal Reserve governor Lael Brainard, further reinforced the Federal Reserve’s timeline with regards to sustaining the asset purchases until they achieve more progress towards the dual mandate by the central bank as Nasdaq 100 Pullback With Falling US Dollar.
Dow Jones, Nasdaq, US 10-Year Yield– 30-Minute Chart
THURSDAYS ASIA PACIFIC TRADE OUTLOOK
The Asia pacific stock markets might extend previous gains on Wednesday after weak yields across the long-dated United States government bond yields. The $24 Billion strong auction of 30-year Treasuries yesterday morning nudged the 30-year yield down almost 3%. The latest strength seen on the DXY index eased along with the decline in yields, but the US Dollar started to get closer in the aftermath of a short term plunge below a 90 level.
Traders are looking at the economic data to be released by China on Thursday after the foreign direct investment and trade figures for last month will breach the previous levels.
It’s expected that Chinese net exports would experience a spillover effect on the closely related economies like New Zealand and Australia. Both NZD and AUD performed very well against the US Dollar last year, but the Australian dollar performed better than the New Zealand Dollar. This trend seems to have the AUD/NZD rate on the right path to repeat this performance. On the other hand, the AUD tends to also benefit from stronger commodity prices boosting the economy via the export channels, mainly because of China.
AUD/NZD TECHNICAL FORECAST:
The price rally in the AUD/NZD from last month’s swing low has lately brought the multi-month peaks, clearing November 2020 high early this week. Furthermore, the MACD divergence indicators’ healthy momentum as well as the RSI oscillator is almost breaching the new 70-level. The earlier mentioned November peak might offer support to the downtrend.