AUD/USD ANALYSIS &TALKING POINTS
- Aussie PMI miss > U.S. PMI miss.
- Fed hawks underneath strain as U.S. financial information disappoints.
- AUD/USD take a look at key space of confluence.
AUSTRALIAN DOLLAR FUNDAMENTAL FORECAST: BULLISH
The Australian dollar ended the week on a comparatively optimistic notice contemplating the truth that Australian manufacturing and providers PMI’s for July declined. Each prints remained above the midpoint 50 stage (expansionary territory) however the deterioration highlights the affect of inflation and recession fears on Australian financial information. What boosted the Aussie to month-to-month highs was the PMI miss within the U.S. which pushed the composite and providers readings into the contractionary zone. This being stated, the Australian dollar being a proxy for threat within the forex house, may flip decrease within the coming months ought to this pattern proceed and recessionary narrative grows.
Subsequent week, the financial calendar (see beneath) is dominated by U.S. centric information with the highlight firmly pointed on the Federal Reserve’s interest rate choice with Australian inflation the one excessive affect occasion regarding AUD. Cash market consensus seems to be settled on a 75bps hike regardless of earlier hawkish feedback by some Fed officers which led to the emergence of a 100bps risk. This dovish re-pricing has given the Australian greenback some assist whereas a few of Australia’s key commodity exports (iron ore, gold and coal) have proven some value appreciation.
Supply: DailyFX economic calendar
Going ahead, the Aussie greenback can be torn between world threat sentiment and AUD’s pro-growth standing whereas U.S. and Chinese language development elements play tug of battle with the destiny of the AUD/USD pair.
AUD/USD TECHNICAL ANALYSIS
AUD/USD DAILY CHART
Chart ready by Warren Venketas, IG
Each day AUD/USD price actionhas rallied to on Friday and now exams the longer-term trendline resistance a part of the higher falling wedge-like chart sample (black). A confirmed breakout may level to extra upside with the 0.7000psychological stage being the following key resistance zone.
Key resistance ranges:
- 100-day EMA (yellow)
- Wedge resistance (black)
Key assist ranges:
- 50-day EMA (blue)
- 20-day EMA (purple)
- 0.6824 (23.6% Fibonacci)
IG CLIENT SENTIMENT DATA: MIXED
IGCS exhibits retail merchants are at the moment LONG on AUD/USD, with 57% of merchants at the moment holding lengthy positions. At DailyFX we sometimes take a contrarian view to crowd sentiment nevertheless, latest adjustments in lengthy and quick positioning leads to a short-term cautious bias.
Contact and comply with Warren on Twitter: @WVenketas