WEEK AHEAD : 0.676 and 0.55 eyed as Aussie drops 2.3% last week

Hello Friends! Today I Bring you the market analysis for the week ahead on the AUDUSD pair



Since the central bank induced bounce in the Australian dollar (May 4), it has tumbled about 6% to the May 12 low of around $0.6830. Nearly half of that decline was recorded on May 11 and 12, yet the bounce ahead of the weekend was not particularly impressive. It was unable to rise above the previous day's high (~$0.6955), and the close was still the second lowest since mid-2020.


The Aussie fell by 2.3% last week, and it was the sixth weekly decline in the past seven. It lost around 8% this run. The next important target on the downside is around $0.6760, the halfway point of the Aussie's rally from the pandemic low near $0.5500 in March 2020 to slightly above $0.8000 a year later.



Economic data this week will be closely scrutinized as investors try to gauge whether aggressive tightening by the Fed to curb soaring inflation will result in a hard or soft landing for the economy.

Tuesday’s retail sales figures for April are expected to show solid gains thanks to steady auto sales.

The U.S. is also to release regional data on manufacturing activity along with reports on housing starts and existing home sales.

Fed Chair Jerome Powell is to speak on Tuesday and is expected to reiterate that the U.S. central bank will hike rates by half a percentage point at each of its next two meetings.

Other Fed speakers during the week include New York Fed President John Williams, St. Louis Fed President James Bullard, Philadelphia Fed President Patrick Harker, and Chicago Fed President Charles Evans.



China's COVID response seems over-the-top and is hobbling the economy. Despite the best efforts of the Chinese government, the world has gotten a glimpse of the gap between the Chinese people and the rulers in Beijing. For years, Chinese officials have raised questions about the US model, but the chickens have come home to roost, and China's developmental model is being questioned in new ways.

The sharp drop in Chinese lending in April is a warning of a dismal economic performance as the lockdowns and social restrictions crippled around half of its economy.





This is an article not financial advice, always do your own research



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