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CAFX Market Update 20/12/2021

Good Morning,


Welcome to our daily market update where we help keep you informed on the latest happenings in the world of FX and show you what this means for the Mighty Aussie Dollar.

If you have any questions or would like anything further explained, please don’t hesitate to reach out to your account manager or email info@cafx.com


Key Data Being Released Today Monday the 20th of December 2021

  • No real impactful data during the day


The Aussie Dollar – Fundamentals


The overnight fall of the AUD/USD throughout US trading hours was spurred primarily by a broad pick up in USD strength in wake of hawkish Fed commentary. But this is only one day, there are some green shoots coming through suggesting that there is potential for the Aussie to go higher form here.


The recent turnaround in fortunes for the AUD has been driven both by positive domestic and external factors. On the external side, the AUD has derived support from the easing back of initial fears over potential disruption to the global economy from the new Omicron variant. The market appears to be making the assumption that economic disruption will prove short-lived as the new variant spreads more rapidly and is potentially less severe. At the same time, the AUD has derived support from the recent policy shift in China which has helped to ease concerns over the risk of a sharper slowdown from weakness in the real estate sector.


Domestic developments have also been favorable for the AUD. It has been revealed that GDP contracted less than expected in Q3 in response to the lockdowns, and the economy is now bouncing back strongly. The unemployment rate had already dropped back sharply in November to a low of just 4.6% and is well below pre-pandemic levels. It has further reinforced speculation that the RBA will speed up plans for tightening policy at their next meeting in February. The release next week of the minutes from this month’s RBA meeting could provide greater clarity over whether the RBA will even end QE immediately in February.




The Aussie Dollar – Technical Analysis

On Friday night the Dollar failed to consolidate its break of the 0.7172 level of resistance and fell 0.84% or roughly 60 points. We will be watching the market closely to see its reaction to the 0.7110 support level, as the market has been bouncing between these levels since the 8th of December.


Resistance on the Top Side – the market failed to consolidate its break of 0.71720 and retraced. If 0.7172 is broken we see more resistance at 0.7300, which is very close to the 50 Day MA (0.7298)

Support on the Downside –   If the market continues to fall, we see support at 0.7110 with more support at the psychological level of 0.7000. If the market breaks 0.7000 continues to fall there is support at 0.6921 and then at 0.6800.



AUD/USD Daily Chart


DXY (USD INDEX) Daily Chart



Major Global Markets

  • Stocks
    • S&P 500 closed at 4620
    • NASDAQ closed at 15844
    • ASX 200 closed at 7304
  • Currencies
    • AUD/USD – At the time of writing this report trades at 0.7123
    • AUD/JPY – At the time of writing this report trades at 81.02
    • AUD/CNH – At the time of writing this report trades at 4.5492
    • DXY (US Dollar Index) – At the time of writing this report trades 96.672
    • AUD/EUR – At the time of writing this report trades 0.6340
  • Bonds
    • US 10-year Bonds are currently at 1.405
    • Aussie 10-year Bonds are currently at 1.588
  • Commodities
    • Iron Ore 62% – Trading at USD/T 111.64
    • Gold – trading at USD/OZ 1796
    • Brent Crude Oil – Trading at USD/Bbl 72.96