AUD/USD, ASX 200 Analysis: Morning Brief - 31st May 2023

Matt Simpson financial analyst
By :  ,  Market Analyst

Market summary

  • The Republican House of Representatives are set to vote today on whether to pass the debt-ceiling bill on to the Democratic Senate
  • Both Biden and McCarty continue to claim they have enough votes, but that doesn’t mean we should not rule out a surprise bump in the road along the way to potentially derail the deal and spark a bout of risk-off for markets (which could send risk assets such as indices, AUD/JPY lower and gold higher)
  • A bearish outside day formed on the US dollar index to suggest a near-term inflection point at the highs
  • EUR/USD found support with a bullish engulfing day at the 200-day EMA / 50-week EMA / 20-month EMA
  • USD/CAD formed a bullish hammer day at the 20-day EMA, AUD/USD formed a bearish engulfing day
  • Australian building approvals fell -8.1% in April, below 2% expected
  • Australia’s Treasury Secretary warns that the economy may be entering a period of poor growth, although inflationary pressures are expected to diminish from here
  • Expectations are for China’s PMIs to contract again, according to a Bloomberg survey (which could potentially weigh on AUD today, if weak enough)
  • Keep an eye on comments from RAB Governor Lowe who speaks at 09:00 AEDT, as traders try to decipher whether the RBA will hike again or pause at their June meeting
  • However, the key data point for AU traders is the monthly inflation report at 11:30 AEDT




Events in focus (AEDT):

  • 09:00 - RBA Lowe speaks
  • 09:50 – Japan’s retail sales, industrial production
  • 1100 – New Zealand business confidence
  • 11:30 – Australian inflation, China’s PMI (manufacturing, services and composite from NBS)


ASX 200 at a glance:

  • Lowest daily range in six weeks
  • 20-day EMA capped as resistance
  • Price action on the intraday timeframe appears to be corrective
  • SPI futures point to a slightly lower open of ~0.47%
  • However, a 3-day bullish reversal formed on the daily chart on Monday (morning star reversal)
  • Now looking for evidence of a swing low and move to 7300


AUD/USD 1-hour chart:


The Aussie printed a bearish engulfing day near the cycle lows to suggest it wants to break lower and extend its bearish trend. However, we’ve seen a bit of a shakeout around the lows, with a double bottom formed above 0.6500 with elevated volumes, which suggests demand around this level and the potential for a bounce. The most traded price within the sideways range is 0.6540, which could act as a magnet for a move high – at which point we would seek for evidence of a swing high up to the March / April lows for another leg lower.


Asia Data Calendar (AEDT):



-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge


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