It appears Fibonacci is a Powell man when it comes to selection of the next Fed Chair. Either that or he thinks tomorrow’s Aussie CPI data will be higher than expected.
The quarterly CPI releases is one of the big events on the Aussie Dollar calendar. Tomorrow will be no exception. The underlying trimmed and weighted measures will be the key focus. The more volatile headline measure is expected to be influenced by the sharp jump in electricity prices. Expectations are for both the trimmed and weighed mean measures of CPI to rise 2% year on year. A stronger move would take CPI into the RBA’s target range and be bullish $A.
There are also expectations that the new Fed Chair will be announced in coming days. Jerome Powell and Janet Yellen are perceived as being cautious about lifting rates. Either appointment could be bearish $US after the recent rally. The market is concerned John Taylor could be more of a hawk so his appointment could be bullish $US
Throw into this mix the conclusion of China’s People’s Congress. Markets will also have a close watching brief on any implications for economic policy
Aussie Dollar goes into all this having made a low right at the 61.8% retracement level yesterday. Rejection of that level would be confirmed by a higher high. I reckon that could be quite bullish for the Aussie Dollar chart. A larger corrective rally could be on the cards and could see a move beyond the recent peak around 79c.
61.8% needs to be rejected for this to come into play. Otherwise, Aussie may take a look at deeper retracement levels or supports before rallying.