The Week Ahead – AI fever steals the show – Orbex Forex Trading Blog

AUDUSD retreats as RBA awaits more data

The Australian dollar falls back as doubt grows over the RBA’s hike push. Minutes from the central bank’s latest meeting showed signs of hesitation as to whether to hit the pause button again in their quantitative tightening. An easing in the upcoming inflation reading could cement expectations of a dovish tilt from the officials. Another factor that could be detrimental to the Aussie is weak growth in China, Australia’s major trading partner, which had led local authorities to cut rates in an attempt to shore up a feeble economic recovery. A cautious mood would drive the price to 0.6500 while 0.6900 remains a key hurdle.

USDCAD rallies as inflation may be stickier

The Canadian dollar advances as upbeat data reinforces the case for a Bank of Canada rate hike next month. Stronger-than-expected retail sales data in April foreshadows persistent inflation as consumer’s spending remains robust in spite of tougher financial conditions. If this week’s reading shows that the CPI has become stickier, the BoC could tighten further at the July policy meeting. With its US counterpart still lagging behind the stop-and-go policy, this would fuel the loonie’s rally. In addition, a recovery in oil prices would further bolster the commodity-related currency. The pair is drifting towards 1.3000 and 1.3360 is the first hurdle.

XAUUSD retreats as safety flows ease

Bullion ticks lower as a rebound in risk sentiment reduces flows into safe haven assets. Fed Chair Jerome Powell’s balanced language at the June policy meeting and his congressional testimony has helped markets remain optimistic about seeing the light at the end of the tunnel. This combined with a lack of sensational headlines lately might soothe investors’ nerves by suggesting that economic fundamentals have stayed solid despite brief hiccups, which in turn would prompt them to trim their exposure in the non-yielding metal. The bull’s profit-taking is sending the price towards 1880 and 1985 is the immediate resistance.

NAS 100 rallies over AI boom

The Nasdaq 100 hits a 15-month high carried by tech megacaps. In what looks like an odd bull run, extreme enthusiasm in AI has fuelled momentum stocks despite a lingering cautious mood. Macroeconomy-wise, a soft GDP figure for the first quarter would suggest that the Fed’s efforts to stall the economy are starting to have their intended effect, which would be a step closer to the peak interest rates. The price pattern shows that investors remain hopeful with bets for only one additional rate increase this year, followed by cuts in earlier next year. The index is rising towards 15500 with 14250 as the first support.

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