AUDUSD slides on weak data

The Australian dollar is the worst performing G10 currency today, dragged down by disappointing macro data. Australia's seasonally adjusted wage price index rose by 3.3% YoY in Q4, after an upwardly revised 3.2% rise in Q3 and below analysts’ estimates of 3.5%. This was the highest reading since Q4 of 2012, amid further improvement in business conditions in the wake of the COVID pandemic. Wages in the private sector quickened to 3.6%, the highest since Q3 of 2012; while those in the public one accelerated to 2.5%, the highest since Q2 of 2019.

Meanwhile construction work completed dropped by 0.4% QoQ, well below market estimates of 1.5% rise, while Australia’s Westpac Leading Index marked -0.1% figure in January, the second time in a row. Also stronger-than-expected US economic data and hawkish remarks from policymakers also bolstered expectations the Fed would keep pushing interest rates higher to bring down inflation, weighing on the Aussie further. Today market attention will focus on the release of the latest FOMC monetary policy meeting minutes, due later during the US session,  which may determine the short-term trajectory for the pair.

From technical point of view, AUDUSD approaches a major support zone between 0.6810 - 0.6790, which is marked with previous price reactions and 78.6% Fibonacci retracement of the upward wave launched at the beginning of the year. Should break lower occur, sell-off may deepen towards the lower limit of the 1:1 structure at 0.6725 or even January lows at 0.6688. Nevertheless as long as price sits above the aforementioned support zone, another upward impulse may be launched towards local resistance at 0.6870.

AUDUSD, H4 interval. Source: xStation5