Dollar Strengthens with Fed Clarity, China Ambiguity Drags Regional Sentiment
Action Insight Weekly Report 10-12-24 |
Dollar Strengthens with Fed Clarity, China Ambiguity Drags Regional Sentiment |
Global financial markets last week were influenced by a combination of clarity and uncertainty. In the US, economic data reinforced expectations of a gradual and measured policy easing path by Fed. Investors embraced the prospect that Fed would not repeat the aggressive 50 bps rate cut implemented in September. This optimism regarding a soft landing for the US economy propelled stock markets to new record highs, with gains observed across a broad range of sectors. In contrast, ambiguity surrounding China's fiscal stimulus measures led to significant volatility in Asian markets. Traders offloaded stocks in Hong Kong and mainland China, reversing some of the recent strong rallies. The lack of a clearly defined fiscal policy roadmap from Chinese authorities has unsettled investors. This volatility is likely to persist until more concrete fiscal plans are unveiled, as uncertainty prompts many investors to reduce exposure rather than risk unforeseen downturns. In the currency markets, Swiss Franc emerged as the strongest performer, narrowly outperforming the Dollar, which was the second strongest. The greenback is approaching key technical levels alongside 10-year Treasury yield, which will be critical in determining whether Dollar is reversing its near-term downtrend. Japanese Yen was the third strongest currency, completing the trio of traditional safe-haven assets that benefited amid uncertainties. On the weaker side, Canadian Dollar ended the week as the worst performer, followed by New Zealand Dollar and Australian Dollar. Despite robust employment data from Canada, the Loonie struggled due to firm market expectations of swift policy easing by BoC. Kiwi remained under pressure following RBNZ's 50 bps rate cut. Both Kiwi and the Aussie were additionally weighed down by the uncertainty clouding China's economic policies. |
AUD/USD Weekly Report AUD/USD's fall from 0.6941 short term top extended to 0.6701 last week but recovered since then. Initial bias stays neutral this week first. On the downside, break of 0.6701 and sustained trading below 55 D EMA (now at 0.6743) should confirm rejection by 0.6941 fibonacci level. Intraday bias will be back on the downside for 0.6621 support next. On the upside, however, break of 0.6809 minor resistance will bring retest of 0.6941 high instead. | |
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