AUD/USD and NZD/USD Fundamental Analysis: Aussie PPI in Focus

It is a busy morning for the AUD/USD. Wholesale inflation, private sector credit, and housing credit will be in focus later this morning.

While private sector and housing sector credit are considerations for the RBA, we expect wholesale inflation to garner more interest. Wholesale inflation is a precursor to consumer price inflation. An unexpected pickup in wholesale inflationary pressure would signal sticky inflation.

Economists forecast Australia’s producer price index to increase 5.0% in Q1 year-over-year versus a 5.8% rise in Q4.

With no economic indicators from New Zealand to influence the NZD/USD, we expect further investor reaction to the US GDP and jobless claims from Thursday.

Following the GDP and Jobless claims, the probability of a 25-basis point May interest rate hike rose from 72.2% to 86.9%. Significantly, the chances of a 25-basis point move in June increased from 13.7% to 24.7%, according to the CME FedWatchTool.

Later today, US economic indicators will influence the AUD/USD and NZD/USD pairs. US inflation and personal spending will be in the spotlight.

AUD/USD Price Action

The Aussie was down 0.05% to $0.66271. A mixed start to the day saw the AUD/USD fall to an early low of $0.66204 before rising to a high of $0.66303.

Technical Indicators

Resistance & Support Levels

The AUD/USD needs to avoid the $0.6620 pivot to target the First Major Resistance Level (R1) at $0.6645. A move through the Thursday high of $0.66353 would signal a bullish session. However, wholesale inflation and market risk sentiment should support a pre-US session breakout.

In case of a breakout session, the Aussie would likely test the Second Major Resistance Level (R2) at $0.6660. The Third Major Resistance Level (R3) sits at $0.6700.

A fall through the pivot would bring the First Major Support Level (S1) at $0.6605 into play. However, barring a data-fueled sell-off, the AUD/USD pair should avoid the Second Major Support Level (S2) at $0.6580.

The Third Major Support Level (S3) sits at $0.6540.

Looking at the EMAs and the 4-hourly chart, the EMAs send bearish signals. The AUD/USD sits below the 50-day EMA, currently at $0.66630. The 50-day EMA pulled back from the 100-day EMA, with the 100-day EMA falling back from the 200-day EMA, delivering bearish signals.

A move through R1 ($0.6645) would give the bulls a run at R2 ($0.6660) and the 50-day EMA ($0.66630). A breakout from the 50-day EMA would bring the 100-day EMA ($0.66799) into play. However, failure to move through the 50-day EMA ($0.66630) would leave S1 ($0.6605) in view.

NZD/USD Price Action

This morning, the Kiwi was down 0.02% to $0.61461. A mixed start to the day saw the NZD/USD fall to an early low of $0.61405 before rising to a high of $0.61481.

Technical Indicators

Resistance & Support Levels

The NZD/USD has to avoid the $0.6141 pivot to target the First Major Resistance Level (R1) at $0.6168. A move through the Thursday high of $0.61611 would signal a bullish session. However, market risk sentiment must support a pre-US session breakout.

In the case of a breakout session, the Kiwi would likely test the Second Major Resistance Level (R2) at $0.6188 and resistance at $0.62. The Third Major Resistance Level (R3) sits at $0.6235.

A fall through the pivot would bring the First Major Support Level (S1) at $0.6121 into play. However, barring a data-off-fueled sell-off, the NZD/USD should avoid sub-$0.61 and the Second Major Support Level (S2) at $0.6094.

The Third Major Support Level (S3) sits at $0.6047.

Looking at the EMAs and the 4-hourly chart, the EMAs send bearish signals. The NZD/USD sits below the 50-day EMA, currently at $0.61625. The 50-day EMA fell back from the 100-day and 200-day EMAs, with the 100-day EMA pulling back from the 200-day EMA, delivering bearish signals.

A move through the 50-day EMA ($0.61625) and R1 ($0.6168) would give the bulls a run at R2 ($0.6188) and $0.62. However, failure to move through the 50-day EMA ($0.61625) would leave S1 ($0.6121) in play. A move through the 50-day EMA would send a bullish signal.