AUD/USD, NZD/USD, USD/CNY – Asian Session Daily ForecastWe’re seeing limited movement in the currency markets in the Asian session on Wednesday. The Australian and NZ dollar remain rangebound, while the Chinese yuan is flat. All eyes are on the Federal Reserve, which is leaning towards cutting interest rates by 25 basis points. If the Fed does act, traders could be in for a bumpy ride during the day.
AUD/USD continues to have a quiet week. In the Asian session, the pair is trading at 0.6847, down 0.27%.
Growth Rate Falls, Job Data Next
The Melbourne Institute Leading Index declined by 0.3% in August, the fourth decline in the past five months. This points to ongoing weakness in the Australian economy. On Thursday, all eyes will be on key employment data. The Australian economy is expected to create 15.2 thousand jobs in August, a respectable reading but well below the sizzling 41.1 thousand a month earlier.
Will Fed Wake Up Sleep Aussie?
The Federal Reserve has hinted that further rate cuts are coming in the fourth quarter, and the Fed could make a move at its monthly policy meeting later in the day. The CME Group is predicting a 56% chance of a 1/4 point rate cut. If the Fed does press the rate trigger, we could see some losses for the U.S dollar.
AUD/USD Technical Analysis
AUD/USD continues to test the 50-day moving average support at 0.6849. Will this continue on Wednesday? I continue to keep an eye on support at 0.6805. This is not a strong line, and the pair is within striking distance. On the upside, 0.6865 remains relevant. It is currently an immediate resistance line and it could face pressure during the day.
USD/CNY is flat in Wednesday trade. In the Asian session, the pair is trading at 7.0869, down 0.06%.
Fed Poised to Cut Rates (Maybe)
With no major Chinese events for the remainder of the week, U.S. indicators will have a magnified effect on the movement of the Chinese yuan. All eyes are on Washington, as the Federal Reserve will set the benchmark rate later on Wednesday. The Fed has indicated that more rate cuts are on the way, and we could see a move as early as today. However, it’s by no means a done deal – the CME Group has projected a 56% chance of a rate cut. This uncertainty could trigger volatility in the currency markets after the rate decision, so traders should be prepared for a bumpy ride in the North American session.
USD/CNY Technical Analysis
The dollar posted gains of 0.36% on Tuesday, its best daily performance since August 26. Despite this upward move, the yuan remains rangebound. On the upside, USD/CNY is currently within striking distance of 7.1100. If the pair can break through this resistance line, I would expect a breakout to higher ground. The pair traded above this line for much of last week, so a push above this line is a reasonable possibility. On the downside, 7.0592 has some breathing room, with the pair posting gains on Tuesday.
NZD/USD has posted modest losses on Wednesday, erasing the short-lived gains we saw on Tuesday. In the Asian session, the pair is trading at 0.6337, down 0.36% on the day.
Ahead – New Zealand GDP
Weak global conditions and the ongoing U.S-China trade war have taken a toll on the New Zealand economy, which is heavily dependent on trade and exports. After back-to-back gains of 0.6% in the previous two quarters, the markets are braced for slower growth in Q2, with a forecast of 0.4%. If actual growth does not exceed the estimate, investors may react negatively and the NZ dollar could lose ground.
All eyes on Fed
The Federal Reserve holds its monthly policy meeting later in the day, and there is uncertainty as to whether the Fed will press the rate trigger at today’s meeting, or wait a month or two. The CME Group is predicting a 56% chance of a 1/4 point rate cut. If the Fed does press the rate trigger, we could see some losses for the U.S dollar.
NZD/USD Technical Analysis
Although NZD/USD continues to be rangebound, there is strong pressure on support at 0.6325. This line has managed to remain intact since September 3, but was tested on Tuesday. This pattern could continue on Wednesday. If the pair can finally break this line, there is room for a downward breakout by the pair. On the upside, there is immediate resistance at 0.6360. Above, 0.6425 is a major resistance line.