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Market Analysis – AUDUSD

The AUDUSD pair continues its correction upward as the instrument forms its fourth consecutive trading day where the price has ended higher than the market open. Currently, the price action is trading in an uptrend at 0.7830. Measuring the momentum on the daily chart, we can see the momentum and volatility of the price movement has increased this morning during the Asian Session. The increase in momentum is mainly due to the depreciation of the US Dollar since the start of the week, however, it is also important to note that the Australian Dollar has also witnessed strong movements against the currency over the past couple of weeks.  

This morning, the minutes of the meeting of the Reserve Bank of Australia were published, where the growth of the national economy was noted at a faster pace than analysts predicted. Under current conditions, GDP may return to pre-crisis levels in the second half of 2021 according to bank officials. On average, the figure is expected to be 4.25% in 2021 and 3.5% in 2022. In turn, the unemployment rate is projected to decrease to 5% by the end of this year and to 4.5% in 2022.

Citizens in Australia reacted negatively to the government’s confirmation of a plan to fully open external borders only from mid-2022. This position has drawn serious criticism from Australian businessmen and industrialists, who believe that the current situation in the country is conducive to the earlier opening of international communications. Also, poor Chinese data on retail sales contributed to the decrease in the instrument. For April, their growth fell significantly short of the forecasts (24.9%) and will amount to only 17.7%. The data indicates a slowdown in economic recovery in China, which remains Australia’s leading trading partner despite mounting political tensions.

USD continues trading in a downtrend. The USD Index has reached the psychological level of 90.000. An attempt to overcome it may follow today, but this cannot be for certain, or in any way confirmed until the movement has actually found support at this level. The catalyst for this movement may be today’s data on building permits and the volume of housing starts. Building Permits in April may amount to 1.770M, and Housing Starts may reduce to 1.710M. Looking at the Australian Dollar in general against its main currency pairs, we can see the currency is strengthening today against its main competitors, including the Yen, Pound, Canadian Dollar and Euro. 

The US Dollar still remains under pressure from negative statistics released on Friday as the currency struggles to find support from neither technical or fundamental aspects of the market. The volume of retail sales for April did not increase and amounted to 0.0% instead of the expected value of 1.0%. Industrial production also grew more than expected, from 2.4% to 0.7%. These data confirm that the recovery of the American economy is proceeding unevenly, which has further backed the Federal Reserve’s prediction and hence why they are reluctant to alter the country’s Monetary Policy. Meanwhile, EU-US negotiations upon the increased tariffs on steel and aluminum, introduced during the administration of President Donald Trump in 2018, have begun. It is expected that an agreement can be reached before the end of this year.

No major events are scheduled throughout today, but the market is likely going to be evaluating every comment made by the Federal Reserve during tomorrow’s minutes and monetary committee members such as Raphael Bostic, which is scheduled for tomorrow afternoon. In addition to this, the market will also be looking at the statistics released on Thursday morning for Australia’s Employment Change and the country’s Unemployment Rate.

Resistance levels: 0.7816, 0.7890.

Support levels: 0.7759, 0.7690.

 

 

 

 

 

Disclaimer: This material is considered a marketing communication and does not contain, and should not be construed as containing investing advice or a recommendation, or an offer of or solicitation for any transactions in financial instruments or a guarantee or a prediction of future performance. Past performance is not a guarantee of or prediction of future performance.
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