AUDUSD Takes Flight Ahead of a Busy Week

AUD/USD Takes Flight Ahead of a Busy Week

AUD/USD is up almost 1% today near .6820 as the pair took its initial cue from China’s Manufacturing PMI released over the weekend, which was better than expected. China’s Caixin PMI was released today, which also came in better than expected. And with that, AUD/USD was off to the races ahead of the RBA Interest Rate Decision tomorrow morning.

The Royal Bank of Australia is expected to keep rates unchanged at the December meeting at 0.75%. The RBA last moved interest rates on October 1^st, from 1.00% to 0.75%. Market participants will be eagerly watching the statement from the RBA, as employment data was dismal last month. The actual change in employment was -19,000 jobs for October, while the expectation was for +15,000 jobs and the September’s employment change was +12,400 jobs.

AUD/USD has been trading in a downward sloping channel since May 2018.

Source: Tradingview, City Index

However, since late July 2019, the pair has been trading in a sideway trading range within that channel between .6670 and .6930. On Friday, the AUD/USD pulled back to the 61.8% retracement level from the low on October 2^nd to the high November 5^th near .6770. Last week, the pair also formed a falling wedge on a 240-minute timeframe and reached the apex near the .6770 level on Friday. With the bid today, price broke higher out of the confluence of support and retraced to within 10 pips of last weeks selloff near the target for the wedge breakout at .6832. A hawkish statement from the RBA could push the pair near .6925, which are not only near prior highs, but also near the long term downwards sloping trendline from the channel on the daily time frame. Support is below near the previous lows of .6754. Note that the RSI is right at the overbought level on 70, however it is still pointing up. If the RSI begins to turn lower, price may pause or be ready for a slight pullback.

Source: Tradingview, City Index

Although, tomorrow’s RBA rate decision and statement will be important for determining direction of AUD/USD, the timing could have been better as the rate decision won’t be the only factor driving price. On Wednesday, Australia reports Q3 GDP and on Thursday, retail sales. In addition, we see the Caixin Services PMI for China on Wednesday. From the US, we get ISM Non-Manufacturing PMI and ADP Employment Change on Wednesday and Non Farm Payrolls on Friday. These could all help to determine direction of AUD/USD over the next month!

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.