AUD/USD hits two-day highs above 0.6950 on dollar weakness
- US dollar drops on Friday as stocks soar.
- Commodity prices also recover, US yields remain low.
- AUD/USD is modestly higher for the week, holds above recent lows.
The AUD/USD broke above 0.6920 and jumped to 0.6957 on Friday, reaching the highest level in two days. Stocks are rising sharply in Wall Street helping the aussie.
Risk appetite at the end of a positive week
Despite recession fears, investors went for stocks. US stocks indexes are up by more than 2%, extending weekly gains. Negative economic data did not weigh on sentiment and kept US yields far from the recent peak, weakening the dollar.
The AUD/USD recovered from weekly lows under 0.6900, erasing weekly losses. The short-term outlook for the aussie improved. Above 0.6950 the next resistance stands at 0.6990, the last defense to 0.7000. A decline back under 0.6925 would expose the weekly low around 0.6870.
Week ahead
In the US attention will likely continue to be on how the Federal Reserve evaluates the current outlook between high inflation and recession fears. Regarding data, the PCE report (with the Core PCE) on Thursday will be the most important followed by the ISM Manufacturing on Friday.
The economic calendar for Australia show May’s retail sales numbers due on Wednesday. “While consumer sentiment has slumped give rising inflation and a lower confidence around the economic outlook, household balance sheets are in good shape. Further, a strong labour market should keep household spending elevated. A strong retail beat will boost the case for another aggressive move by the RBA in July after their outsized 50bps hike”, said analysts at TD Securities.
Technical levels
Author
Matías Salord
FXStreet
Matías started in financial markets in 2008, after graduating in Economics. He was trained in chart analysis and then became an educator. He also studied Journalism. He started writing analyses for specialized websites before joining FXStreet.
