AUD/USD Price Forecast – Australian Dollar Pulls Back

The Australian dollar has pulled back a bit during the trading session on Monday, as we have breached the 0.71 level to the downside heading into the New York session. That being said, there is significant support just below and I think that will continue to be the case. With that in mind I am looking to take advantage of any type of supportive action here as we have decidedly changed the overall attitude of the Aussie dollar over the last several months.

AUD/USD Video 04.08.20

Keep in mind that there are a lot of concerns about the coronavirus out their still, but it seems like the FX markets are more or less worried about the Federal Reserve and its loose monetary policy above all else. That has benefited the Aussie dollar over the last couple of weeks, and should continue to do so, despite the fact that Melbourne Australia is currently under a bit of a lockdown due to the virus outbreak.

Federal Reserve liquidity is a main driver of markets around the world, and FX markets are not going to be any different. Quite frankly you need to buy other things to protect your wealth that based in US dollars, so the Australian dollar is probably as good as any other asset that you can think of. This could also be a bit of a play on the Chinese economy getting a bit better, but at this point I think that is just the sideshow and not the main attraction.

For a look at all of today’s economic events, check out our economic calendar.

The COVID-19 Stimulus Package and Manufacturing PMIs Put the Dollar and EUR in Focus

Earlier in the Day:

It’s was a busy start to the day on the economic calendar this morning.  The Japanese Yen and the Aussie Dollar were in action, with economic data from China also in focus.

Away from the economic calendar, COVID-19 and the U.S stimulus package continued to be an area of focus.

Looking at the latest coronavirus numbers

According to figures at the time of writing, the number of new coronavirus cases rose by 249,532 to 18,231,469 on Sunday. On Saturday, the number of new cases had risen by 250,087. The daily increase was lower than Saturday’s rise while up from 213,347 new cases from the previous Sunday.

Germany, Italy, and Spain reported 623 new cases on Sunday, which was down from 707 new cases on Saturday. On the previous Saturday, 663 new cases had been reported.

From the U.S, the total number of cases rose by 50,702 to 4,813,647 on Sunday. On Saturday, the total number of cases had increased by 60,171. On Sunday, 26th July, a total of 56,130 new cases had been reported.

For the Japanese Yen

Finalized GDP numbers for the 1st quarter remained unchanged from 2nd estimates. In the 1st quarter, the Japanese economy contracted by 0.6%, following a 1.9% contraction in the 4th quarter.

On an annualized basis, the economy contracted by 2.2%, which was also in line with 2nd estimates. In the 4th quarter, the economy had contracted by 7.3%.

The Japanese Yen moved from ¥105.858 to ¥105.844 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.07% to ¥105.90 against the U.S Dollar.

For the Aussie Dollar

The AIG Manufacturing Index rose from 51.5 to 53.5 in July.

According to the July Survey,

  • The sector expanded for a 2nd consecutive month, a first since October of last year.
  • The food & beverage and machinery & equipment sectors delivered much-needed support in the month.
  • In spite of the expansion, there was continued weakness across the other sectors.
  • Production, employment, supplier deliveries, and finished stocks expanded at a faster rate than in June, however.

The Aussie Dollar moved from $0.71412 to $0.71423 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.14% to $0.7133.

Out of China

In July, the Caixin Manufacturing PMI rose from 51.2 to 52.8. Economists had forecast a rise to 51.3.

According to the July survey,

  • New business from overseas fell at the slowest rate in 6-months, as new orders rose at the quickest pace since Jan-11.
  • Companies also reported the quickest expansion in output since January 2011.
  • Output expanded for a 5th consecutive month, driven by greater client demand as the economic recovery gathered pace.
  • Manufacturers ramped up their buying activity, the rate of expansion the most marked in seven-and-a-half years.
  • In spite of a rise in backlogs and new orders, firms cut staffing levels again in July.

The Aussie Dollar moved from $0.71303 to $0.71366 upon release of the figures.

Elsewhere

At the time of writing, the Kiwi Dollar up by 0.02% to $0.6630.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. Key stats include July manufacturing PMI figures for Spain and Italy.

Finalized manufacturing PMIs are also due out of France, Germany, and the Eurozone.

Barring a marked revision to Germany’s numbers, we would expect Italy and the Eurozone’s PMIs to have the greatest impact.

Following some quite dire 2nd quarter GDP numbers last week, a further pickup in manufacturing sector activity would be welcome.

At the time of writing, the EUR was down by 0.07% to $1.1770.

For the Pound

It’s a relatively quiet day ahead on the economic calendar. July’s finalized manufacturing PMI is due out later this morning.

Barring any revisions, however, the PMI should have a muted impact on the Pound.

Chatter on Brexit and market risk sentiment will influence, as will updates on the latest COVID-19 outbreak.

At the time of writing, the Pound was up by 0.02% to $1.3088.

Across the Pond

It’s a relatively busy day ahead for the U.S Dollar. July’s ISM Manufacturing PMI and finalized Markit Manufacturing PMI figures are due out.

Expect the ISM figures to have the greatest impact on the day. The employment and new orders sub-indexes will likely garner plenty of interest.

Away from the calendar, the focus will remain on Capitol Hill and the progress of the COVID-19 stimulus package.

At the time of writing, the Dollar Spot Index was up by 0.16% to 93.499.

For the Loonie

It’s a quiet day ahead on the economic calendar, with no material stats due out to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of market risk sentiment and the PMI numbers on the day.

At the time of writing, the Loonie was up by 0.03% to C$1.3408 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

The Week Ahead – COVID-19, Economic Data and US Politics in Focus

On the Macro

It’s a busier week ahead on the economic calendar, with 59 stats in focus in the week ending 7th August. In the week prior, just 57 stats had been in focus.

For the Dollar:

It’s another busy week ahead on the economic data front.

In the 1st half, the ISM’s July private sector PMIs, ADP nonfarm employment change figures, and June factory orders are in focus.

We would expect Wednesday’s ISM Non-Manufacturing PMI and ADP Nonfarm Employment Change to have the greatest impact.

The focus will then to Thursday’s initial jobless claims and Friday’s nonfarm payroll numbers and unemployment rate.

Following some disappointing weekly jobless claims figures and the rise in COVID-19 cases, the labor market figures will be key.

For the service sector, any contraction in July, following a jump in productivity in June, would also weigh on riskier assets.

The Dollar Spot Index ended the week down by 1.15% to 93.349.

For the EUR:

It’s also another busy week ahead on the economic data front.

On Monday and Wednesday, July’s manufacturing and services PMIs are due out of Italy and Spain.

Finalized PMIs are also due out of France, Germany, and the Eurozone.

With Spain seeing a spike in new COVID-19 cases, expect some attention to the PMIs. Ultimately, however, the Eurozone’s services and composite will likely have the greatest impact.

The focus will then shift German factory orders for June, due out on Thursday.

At the end of the week, Germany remains in focus, with June’s industrial production and trade figures due out.

Barring disappointing numbers, June retail sales figures for the Eurozone should have a muted impact on Thursday.

The EUR/USD ended the week up by 1.05% to $1.1778.

For the Pound:

It’s a relatively busy week ahead on the economic calendar. July’s finalized private sector PMIs are due out and will garner plenty of interest.

Expect any downward revision to the Services PMI on Wednesday to have the greatest impact.

On Thursday, the focus will then shift to the BoE. More action is expected and the Bank may consider an extension to the suspension of banks paying dividends and buybacks.

While the BoE is in action, we can also expect any further updates on Brexit to also influence in the week.

The GBP/USD ended the week up by 2.27% to $1.3085.

For the Loonie:

It’s a relatively busy week ahead on the economic calendar.

On Wednesday, June’s trade figures are due out ahead of July employment numbers on Friday.

Expect the employment figures to have the greatest impact, however.

Barring dire numbers, the Ivey PMI for July should have a muted impact on the Loonie on Friday.

Away from the stats, COVID-19 and geopolitics will continue to influence crude oil prices and risk sentiment.

The Loonie ended the week up by 0.02% to C$1.3412 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a relatively busy week ahead for the Aussie Dollar.

At the start of the week, the Manufacturing Index figures are due out ahead of a busy Tuesday.

We would expect manufacturing PMIs from China, the EU, and the U.S to have a greater impact, however, on Monday.

The focus will then shift June trade and retail sales figures due out on Tuesday. Expect the retail sales figures to have the greatest impact. The RBA continues to rely on consumer spending to support the economy. Weak numbers will be a test for the Aussie Dollar.

For the week, however, the main event is the RBA monetary policy decision on Tuesday.

Following the spike in new COVID-19 cases, will the RBA remain optimistic about the economic recovery?\

Any dovish chatter and the Aussie Dollar could eye sub-$0.70 levels. At the end of the week, the RBA’s statement on monetary policy will also draw interest.

The Aussie Dollar ended the week up by 0.53% to $0.7143.

For the Kiwi Dollar:

It’s another quiet week ahead on the economic calendar.

2nd quarter employment figures are due out on Wednesday. The markets will likely be forgiving to an extent, with COVID-19 expected to have an impact on employment.

With economic data on the lighter side, private sector PMIs from China, the EU, and the U.S will influence.

Expect geopolitics and COVID-19 news to also have an impact in the week. Any signs of a slowdown in new cases globally and expect support to kick in.

The Kiwi Dollar ended the week down by 0.18% to $0.6629.

For the Japanese Yen:

It is a busy week ahead on the economic calendar.

Finalized 2nd quarter GDP and July’s manufacturing PMI numbers are due out on Monday.

The focus will then shift to July’s service PMI on Wednesday and June household spending figures on Friday.

While the stats will influence sentiment towards BoJ monetary policy, the Yen will remain at the mercy of COVID-19 and geopolitics.

The Japanese Yen ended the week up by 0.29% to ¥105.83 against the U.S Dollar.

Out of China

It’s a relatively busy week ahead on the economic data front.

July’s private sector PMIs are due out on Monday and Wednesday. Expect the figures to influence risk appetite in the week.

On Friday, July trade figures will also garner plenty of attention. While exports remain the main area of focus, any sizeable fall in imports would test risk appetite on the day.

Away from the economic calendar, any chatter from Beijing will also need monitoring.

The Chinese Yuan ended the week up 0.62% to CNY6.9752 against the U.S Dollar.

Geo-Politics

UK Politics:

Brexit will remain in focus. Talks are set to continue through August and September ahead of an EU Summit in October.

60 days may sound like a lot but when considering the lack of progress over 4-years…

A light economic calendar and Brexit chatter have provided the Pound with support. We may even see the markets brush off the chances of a hard Brexit.

Getting on with it seems to be the key desire now rather than dragging it out any longer. Either way, we’re not expecting Johnson and the team to give too much away…

U.S Politics:

Last week, the Republicans showed signs of fragmentation. As Presidential Election stress builds, we could see more fractures as Trump attempts to distract voters.

The immediate issue at hand, however, is the COVID-19 stimulus package. Any failure to deliver will weigh on the Dollar. Labor market conditions have not improved and the 2nd wave has shown little sign of slowing. A lack of benefits for the unemployed will raise more issues than a fall in household spending. We have already seen social unrest…

The Coronavirus:

It was yet another bad week, with the number of new COVID-19 cases continuing to rise at a marked pace.

From the market’s perspective, the 3 key considerations have been:

  1. Progress is made with COVID-19 treatment drugs and vaccines.
  2. No spikes in new cases as a result of the easing of lockdown measures.
  3. Governments continue to progress towards fully opening economies and borders.

Last week, we saw a number of countries including Hong Kong and the UK reintroduce containment measures. Hopes of progress towards a vaccine had limited the damage last week. In the week ahead, however, the numbers will need to ease off to avoid spooking the markets.

At the time of writing, the total number of coronavirus cases stood at 17,981,937. Monday to Saturday, the total number of new cases increased by 1,782,490. Over the same period in the previous week, the total number had risen by 1,531,149.

Monday through Saturday, the U.S reported 447,236 new cases to take the total to 4,762,945. This was up marginally from the previous week’s 417,070

For Germany, Italy, and Spain, there were 22,814 new cases Monday through Saturday. This took the total to 793,804. In the previous week, there had been 17,083 cases over the same period. Spain accounted for 16,101 of the total new cases in the week.

AUD/USD Forex Technical Analysis – Trader Reaction to .7146 Pivot Sets the Tone

The Australian Dollar touched its highest level since February 2019 on Friday, but at the end of the session, buyers couldn’t hold onto those gains and the currency finished lower. With the U.S. Dollar gaining against most major currencies, the strong reversal to the downside could be indicative of a short-term top.

We’re going to have to determine by the price action on Monday if the price slide was fueled by end-of-the-month profit-taking and position-squaring, or if it was generated by legitimate selling or shorting due to a change in sentiment.

On Friday, the AUD/USD settled at .7142, down 0.0053 or -0.74%.

Early in the session on Friday, the AUD/USD was supported by a survey out of China showing factory activity expanded in July for the fifth month in a row, beating analysts’ expectations. Overall, throughout the month, the Aussie benefited from China’s economic recovery with its reliance on infrastructure heavy commodity intensive capital investment.

The AUD/USD was also supported by a combination of the improvement in risk sentiment and key commodity price drivers. Additionally, the widening in real bond yield differentials after U.S. rates tanked is also seen providing upside momentum.

Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed on Friday when buyers took out the February 21, 2019 main top at .7207.

A trade through .7064 will change the main trend to down, but Friday’s closing price reversal top is already offering evidence that the selling may be greater than the buying at current price levels.

The minor range is .7064 to .7227. Its 50% level or pivot is .7145.

The short-term range is .6833 to .7227. If the trend changes to down, then look for a test of its retracement zone at .7030 to .6983.

Short-Term Outlook

The closing price reversal top will be the focus on Monday because trader reaction to this chart pattern will tell us if momentum is shifting to the downside.

On the bearish side, a trade through .7133 will confirm the chart pattern. If this move generates enough downside pressure to take out the minor bottom at .7121 then the minor trend will change to down and momentum will officially turn lower.

The daily chart indicates there is plenty of room to the downside under .7131 with .7064 the next likely target.

On the bullish side, the failure to follow-through to the downside and a sustained move over .7146 will signal the presence of buyers. If this move develops then we could easily see a retest of .7227 especially if the U.S. Dollar starts out weak in August.

For a look at all of today’s economic events, check out our economic calendar.

The Weekly Wrap – Economic Data, the FED, and Trump Sank the Dollar

The Stats

It was a busy week on the economic calendar, in the week ending 31st July.

A total of 56 stats were monitored, following the 41 stats from the week prior.

Of the 56 stats, 31 came in ahead forecasts, with 24 economic indicators coming up short of forecasts. Just 1 stat was in line with forecasts in the week.

Looking at the numbers, 19 of the stats reflected an upward trend from previous figures. Of the remaining 37, 35 stats reflected a deterioration from previous.

For the Greenback, it was a 6th consecutive week in the red. In the week ending 31st July, the Dollar Spot Index fell by 1.15% to 93.349. In the week prior, the Dollar had fallen by 1.57%.

The continued slide through the month of July left the Dollar Spot Index down by 4.15% for the month.

Dire economic data, the continued spread of COVID-19, and a dovish FED delivered the loss. Adding to the Dollar angst in the week was Trump’s Presidential Election delay tweet on Thursday…

According to a Reuters report, U.S Dollar net shorts surged to the highest in 9-years, delivering the largest monthly loss Since Sept-2010.

Looking at the latest coronavirus numbers

At the time of writing, the total number of coronavirus cases stood at 17,731,750 for Friday, rising from last Friday’s 15,930,779 total cases. Week-on-week (Saturday thru Friday), the total number of cases was up by 1,801,071 on a global basis. This was higher than the previous week’s increase of 1,741,556 in new cases.

In the U.S, the total rose by 454,463 to 4,702,774. In the week prior, the total number of new cases had risen by 478,299.

Across Germany, Italy, and Spain combined, the total number of new cases increased by 22,753 to bring total infections to 793,804. In the previous week, the total number of new cases had risen by 17,404. Spain alone reported 16,101 new cases in the week.

Out of the U.S

It was a busy week on the economic data front.

Key stats included July consumer confidence, the weekly jobless claims, and 2nd quarter GDP figures.

The stats were skewed to the negative. Consumer confidence deteriorated in July, as a result of the 2nd wave of the pandemic. Initial jobless claims increased for a 2nd consecutive week, with the U.S economy contracting by 32.9% in the 2nd quarter.

At the end of the week, July consumer sentiment figures were also revised down.

There were some positives, however. Durable and core durable goods continued to rise in June.

Chicago’s PMI returned to expansion in July, with personal spending rising for a 2nd consecutive month in June. These were good enough to give the Dollar much-needed support at the end of the week.

In the equity markets, the NASDAQ and S&P500 rose by 3.69% and by 1.73% respectively. The Dow bucked the trend, however, falling by 0.16%.

Out of the UK

It was a particularly quiet week on the economic calendar, with no material stats to provide the Pound with direction.

A lack of economic data contributed to the upside in the Pound that benefitted from Dollar weakness. News of the government reintroducing lockdown measures in the North weighed at the end of the week, however.

In the week, the Pound rallied by 2.27% to $1.3085 in the week, following on from a 1.80% gain from the previous week. The FTSE100 ended the week down by 3.69%, following on from a 2.65% loss from the previous week.

Out of the Eurozone

It was a busy week on the economic data front.

In a quiet 1st half of the week, Germany’s IFO Business Climate Index figures for July provided support on Monday.

The focus then shifted to 2nd quarter GDP numbers. France, Germany, and the Eurozone reported particularly dire 2nd quarter numbers.

The German economy contracted by 10.1%, the French economy by 13.8%, and the Eurozone economy by 12.1%.

It wasn’t enough to send the EUR into the red, however, as the U.S delivered darker numbers.

For the week, the EUR rose by 1.05% to $1.1778, following a 2.00% rally from the previous week. A 0.58% pullback on Friday limited the upside for the week.

For the European major indexes, it was another bearish week. The DAX30 slid by 4.09%, with the CAC40 and EuroStoxx600 falling by 3.49% and by 2.98% respectively.

For the Loonie

It was a quiet week on the economic calendar.

Economic data included May GDP and June RMPI numbers at the end of the week.

The stats were positive, with the Canadian economy expanding by 4.5% in May, following April’s 11.7% contraction. In June, the RMPI rose by a further 7.5%, following a 16.4% jump in May.

While the other majors lost ground against the Greenback on Friday, the stats delivered support at the end of the week.

The Loonie rose by 0.02% to end the week at C$1.3412 against the Greenback. In the week prior, the Loonie had rallied by 1.22% to C$1.3415.

Elsewhere

It was a mixed week for the Aussie Dollar and the Kiwi Dollar.

In the week ending 31st July, the Aussie Dollar rose by 0.53% to $0.7143, while the Kiwi Dollar fell by 0.18% to $0.6629. A 1.04% slide on Friday, left the Kiwi in the red for the week.

For the Aussie Dollar

It was a relatively quiet week for the Aussie Dollar.

Inflation and private sector credit figures delivered mixed results in the week.

In the 2nd quarter, consumer prices slid by 1.9%, with prices down by 0.30% year-on-year.

Final delivery numbers were not much better, with the Producer Price Index falling by 1.20% in the 2nd quarter. Year-on-year, the index fell by 0.40%.

The numbers were better than forecasts, which propped up the Aussie Dollar.

Private sector credit disappointed, however, falling by 0.3% in June.

While the Aussie Dollar found support against the Greenback, the latest COVID-19 outbreak pinned back the Aussie.

For the Kiwi Dollar

It was another relatively quiet week on the economic data front.

While stats included building consent and business confidence figures, the focus was on the business confidence figures.

A marginal improvement in business confidence did little to support the Kiwi, however.

In July, the ANZ Business Confidence Index rose from -34.4 to -31.8.

According to the latest ANZ Report,

  • A net 9% of firms expect weaker economic activity in their own business, rising from -26% in June.
  • The retail sector drove the recovery, while the agriculture sector was the most negative.
  • 31% of firms say they intend to lay off staff, and 24% say they have less staff than a year ago.

For the Japanese Yen

It was a relatively quiet week on the economic calendar.

Retail sales continued to fall in June. Following a 12.5% slump in May, retail sales fell by 1.20%.

Industrial production delivered hope, however, rising by 2.7% in June, according to prelim figures. In May, production had tumbled by 8.9%.

A weakening U.S Dollar stemming from particularly dire economic data and a dovish FED supported the Yen.

The Japanese Yen rose by 0.29% to end the week at ¥105.83 against the Greenback. A 1.05% slide on Friday, cut the gains from earlier in the week. In the week prior, the Yen had risen by 0.82%.

Out of China

It was a quiet week on the economic data front.

July’s NBS private sector PMI figures delivered mixed results on Friday.

While the Non-Manufacturing PMI slipped from 54.4 to 54.2, the Manufacturing PMI rose from 50.9 to 51.1.

With Beijing and Washington silent, following the previous week’s diplomatic spat, the Yuan recovered to sub-CNY7 levels.

In the week ending 24th July, the Chinese Yuan rose by 0.62% to CNY6.9752 against the Dollar. In the week prior, the Yuan had fallen by 0.37%.

The CSI300 rallied by 4.20%, while the Hang Seng falling 0.45%, as a 2nd wave of the pandemic hit HK.

AUD/USD Weekly Price Forecast – Australian Dollar Reaches 200 Week EMA

The Australian dollar has rallied again during the week, breaking through the 200 week EMA before pulling back a bit. It is worth noting that the Aussie dollar has been very bullish for some time, and the fact that we pulled back from the 200 week EMA is not much of a surprise. Ultimately, I think that the market will find plenty of opportunities, but we will probably need to pullback in order to find them. I am especially interested in the 0.70 level, an area where we should see quite a bit of support.

AUD/USD Video 03.08.20

If we were to break down below there, the next major support level should be the 0.68 handle, an area that continues to see a lot of support based upon structure and of course the 50 week EMA. That being said, there should be plenty of buyers after a move like this, and people are itching to get involved that have not managed to. The greenback continues to get hammered against almost everything due to the Federal Reserve flooding the markets with currency.

A break above the candlestick for this past week of course is bullish but the Australian dollar has gone straight up in the air for so long that it is difficult to imagine that we simply do that. At the very least I think we need to consolidate, if not get that pullback I mentioned previously. The Aussie dollar has to worry about the Reserve Bank of Australia working against it, but quite frankly they are lightweights in comparison to the Federal Reserve, so we are going higher over the longer term.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Price Forecast – Australian Dollar Pulls Back After Initial Surge Higher

The Australian dollar initially rally during the trading session on Friday but pulled back a bit and when I think is probably more profit-taking than anything else. Let us be honest, the US dollar has been on its back foot for quite some time and it makes quite a bit of sense profits going into the weekend. We have seen the Euro pullback as well, so I think this is an overall theme of the day. However, looking at the hammer that formed on Thursday suggests to me that the market is more than likely just going to grind sideways in this general vicinity, giving us an opportunity to pick up value on a small dip.

AUD/USD Video 03.08.20

I believe that there is significant support at the 0.71 handle extending down to the 0.70 level, so it is very likely that we continue to see people jump into this market on these dips to take advantage of what has been an extraordinarily positive run for the Aussie over the last several weeks.

To the downside, as long as we can stay above the 0.68 handle, I do not think much will have changed in the overall attitude. What is interesting to me is that breaking above the levels that we have suggests that this pair could go to the 0.80 level, something that is most certainly worth watching. This suggests a longer-term trend change, but these things of course have to have the occasional pullback. I have no interest in shorting the Aussie anytime soon, as the Federal Reserve continues to flood the financial markets with US dollars.

For a look at all of today’s economic events, check out our economic calendar.

The U.S Dollar Slide Continues on a Busy Day of Stats and Updates from Capitol Hill

Earlier in the Day:

It’s was another busy start to the day on the economic calendar this morning. The Japanese Yen and the Aussie Dollar were in action, with economic data from China also of influence.

Away from the economic calendar, COVID-19 and the U.S stimulus package remained in focus ahead current unemployment benefits expiring today.

The markets were also able to react to particularly dire GDP numbers from Germany and the U.S and Trump’s tweet.

Looking at the latest coronavirus numbers

According to figures at the time of writing, the number of new coronavirus cases rose by 58,655 to 4,626,692 on Thursday. On Wednesday, the number of new cases had risen by 287,638. The daily increase was lower than Wednesday’s rise and down from 270,301 new cases from the previous Thursday.

Germany, Italy, and Spain reported 3,961 new cases on Thursday, which was up from 3,179 new cases on Wednesday. On the previous Thursday, 3,593 new cases had been reported.

From the U.S, the total number of cases rose by 58,655 to 4,626,692 on Thursday. On Wednesday, the total number of cases had increased by 69,828. On Thursday, 23rd July, a total of 69,116 new cases had been reported.

For the Japanese Yen

Industrial production rose by 2.70% in June, following an 8.9% slump in May. Economists had forecast a 1.2% rise.

According to the Ministry of Economy, Trade and Industry,

Industries that mainly contributed to the increase were:

  • Motor vehicles, production machinery, and plastic products.

Industries that mainly contributed to the decrease were:

  • Inorganic and organic chemicals, pulp, paper, and paper products, and other manufacturing.

Industrial production forecasts for July were also positive. Following a 9.2% jump in production forecasted back in June, production is now forecasted to surge by 11.3% in July. In August, production is forecast to rise by 3.4%.

The Japanese Yen moved from ¥104.698 to ¥104.597 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.37% to ¥104.34 against the U.S Dollar.

Out of China

In July, the NBS Manufacturing PMI rose from 50.90 to 51.1, while the Non-Manufacturing PMI slipped from 54.4 to 54.2.

Economists had forecast PMIs of 50.7 and 54.1 respectively.

The Aussie Dollar moved from $0.72039 to $0.72052 upon release of the figures.

For the Aussie Dollar

Producer Price Index and private sector credit figures were in focus early in the day.

According to the ABS,

  • Final demand excluding exports fell by 1.2% in the 2nd quarter and by 0.4% over the past 12-months.
  • Petroleum refining and petroleum fuel manufacturing (-30.1%), child care services (-36.7%), and other agri (-6.4%) weighed.
  • There were increases in other transport equipment (+3.6%), computer and electronic equipment (+3.1%), and other motor vehicle and motor vehicle part manufacturing (+1.2%).

According to the RBA,

Total credit fell by 0.2% in June, following a 0.1% decline in May.

  • Housing credit increased by 0.2%, following a 0.2% rise in May.
  • Personal credit fell by 0.6%, following a 1.3% slide in May, with business credit falling by 0.8%. In May, business credit had fallen by 0.6%.

The Aussie Dollar moved from $0.72032 to $0.72169 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.29% to $0.72145.

Elsewhere

At the time of writing, the Kiwi Dollar was down by 0.01% to $0.6698.

The Day Ahead:

For the EUR

It’s another busy day ahead on the economic calendar. Key stats include 2nd quarter GDP numbers from France, Spain, and the Eurozone that are scheduled for release. June’s consumer spending and retail sales figures for France and Germany will also draw attention.

Prelim June inflation figures for France, Italy, and the Eurozone, also due out but will likely have a muted impact.

Away from the economic calendar, the Dollar could crumble further should lawmakers fail to pass the stimulus package. An alternative would be an agreement to extend the current enhanced federal unemployment insurance policy.

At the time of writing, the EUR was up by 0.30% to $1.1882.

For the Pound

It’s yet another particularly quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

A lack of stats will continue to leave the Pound in the hands of Brexit and the Dollar. The recent lack of economic data from the UK has allowed Dollar weakness to support a move back through to $1.31 levels.

At the time of writing, the Pound was up by 0.26% to $1.3130.

Across the Pond

It’s a busy day ahead for the U.S Dollar. June’s personal spending and inflation figures are key stats due out later today. Finalized consumer sentiment figures for July are also due out. Barring any material downward revision, however, it will likely be brushed aside.

Away from the calendar, the focus on the day will be on Capitol Hill. A failure by lawmakers to pass the stimulus package or to extend the current unemployment benefit would weigh.

We can also expect plenty of Trump tweets as COVID-19 numbers continue to rise across the U.S.

At the time of writing, the Dollar Spot Index was down by 0.31% to 92.731.

For the Loonie

It’s a relatively busy day ahead on the economic calendar. Key stats include May GDP and June RMPI figures.

Expect the GDP numbers to be the key driver on the day.

Away from the economic calendar, however, any further risk aversion would likely mask any upbeat numbers…

At the time of writing, the Loonie was up by 0.04% to C$1.3418 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Price Forecast – Australian Dollar Continues to Chug Along

The Australian dollar continues to grind higher, after initially falling during the day on Thursday. It now looks as if we are ready to try to make a move towards the 0.73 handle, although it is probably going to be very noisy on the way there. All things being equal the Australian dollar continues to be strong but also has a lot of noise attached to it as well, as the Chinese situation is a bit murky to say the least. The US/China trade relations continue to falter, and that is doing nobody any good at this point. Ultimately, I think that buying the dips will end up being the best way going forward and I think that the 0.70 level will probably make a nice support level for the market in general.

AUD/USD Video 31.07.20

The recent bullish flag that we have just broken out of and now are retesting suggests the 0.73 level, although that does not necessarily mean we need to get there overnight. This is probably a story for a couple of weeks down the road but clearly you cannot short this market. With the Federal Reserve loosening its monetary policy the way it has been doing, it is very difficult to imagine a scenario where you should try to buy the greenback for anything more than a short-term trade, which of course is a great way to lose money. Simply following the trend change will make your life much easier and your trading account much bigger over the longer term.

For a look at all of today’s economic events, check out our economic calendar.

Economic Data Puts the Greenback and the EUR in Focus

Earlier in the Day:

It’s was a busier start to the day on the economic calendar. The Kiwi Dollar and the Japanese Yen were in action in the early part of the day.

Away from the economic calendar, COVID-19 and the U.S stimulus package remained in focus following the FED’s overnight monetary policy decision.

Looking at the latest coronavirus numbers

According to figures at the time of writing, the number of new coronavirus cases rose by 287,638 to 17,171,292 on Wednesday. On Tuesday, the number of new cases had risen by 241,391. The daily increase was higher than Tuesday’s rise while down from 288,688 new cases from the previous Wednesday.

Germany, Italy, and Spain reported 3,179 new cases on Wednesday, which was up from 2,602 new cases on Tuesday. On the previous Wednesday, 2,217 new cases had been reported.

From the U.S, the total number of cases rose by 69,828 to 4,498,209 on Wednesday. On Tuesday, the total number of cases had increased by 64,799. On Wednesday, 22nd July, a total of 72,306 new cases had been reported.

For the Kiwi Dollar

Building consents and July business confidence figures provided the Kiwi Dollar with direction early on.

According to NZ Stats, building consents rose by 0.50% in June, following a 41.7% jump in May. While up marginally for the month, consents were up by close to 20% from June 2019.

The Kiwi Dollar moved from $0.66681 to $0.66657 upon release of the data.

In July, the ANZ Business Confidence Index rose from -34.4 to -31.8.

According to the latest ANZ Report,

  • A net 9% of firms expect weaker economic activity in their own business, rising from -26% in June.
  • The retail sector drove the recovery, while the agriculture sector was the most negative.
  • 31% of firms say they intend to lay off staff, and 24% say they have less staff than a year ago.

The Kiwi Dollar moved from $0.66649 to $0.66570 upon release of the figures. At the time of writing, the Kiwi Dollar down by 0.18% to $0.6657.

For the Japanese Yen

According to the Ministry of Economy, Trade, and Industry, retail sales fell by 1.20%. Economists had forecast a 6.50% slide. In May retail sales had tumbled by 12.3% in May, year-on-year.

The Japanese Yen moved from ¥105.012 to ¥105.008 upon release of the figures. At the time of writing, the Japanese Yen was down by 0.14% to ¥105.07 against the U.S Dollar.

Elsewhere

At the time of writing, the Aussie Dollar was up by 0.18% to $0.7175.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic calendar. Key stats include 2nd quarter GDP and July unemployment figures from Germany.

The Eurozone’s unemployment rate and German prelim July inflation figures for July are also due out. The numbers will likely have a muted impact on the EUR.

Expect the GDP and July unemployment figures to be the key driver, along with COVID-19 news and U.S stimulus package updates.

At the time of writing, the EUR was down 0.17% to $1.1772.

For the Pound

It’s yet another particularly quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

A lack of stats will continue to leave the Pound in the hands of Brexit and market risk sentiment.

At the time of writing, the Pound was down by 0.13% to $1.2980.

Across the Pond

It’s another relatively busy day ahead for the U.S Dollar. 2nd quarter GDP and weekly initial jobless claims figures are due out.

While we can expect influence from the GDP numbers, the weekly jobless claims could garner more attention. Another rise in claims will test the market’s resolve.

Away from the calendar, the U.S stimulus package and COVID-19 will remain in focus.

At the time of writing, the Dollar Spot Index was down by 0.10% to 93.357.

For the Loonie

It’s another particularly quiet day ahead on the economic calendar. There are no material stats due out of Canada to provide the Loonie with direction.

A lack of stats will leave the Loonie in the hands of market risk sentiment that will be driven by geopolitics and COVID-19.

At the time of writing, the Loonie was down by 0.05% to C$1.3346 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Price Forecast – Australian Dollar Continues to Rally

The Australian dollar has rallied a bit during the trading session on Wednesday, as we continue to see a lot of bullish pressure. At this point in time I believe that the Aussie dollar is going to go looking towards the 0.80 level, but it may take a multiple leg approach. That is not a huge surprise though, because we have a lot to work through when it comes to the previous downtrend. All things being equal, the market is likely to continue to find buyers every time it dips, as the Federal Reserve continues to liquefy the markets. All things being equal, I am a buyer of dips and I recognize that with the FOMC coming out, that could probably cause a bit of volatility. I would love to see the Aussie fall as a result, because longer-term nothing will have changed.

AUD/USD Video 30.07.20

I believe there is massive support down to the 0.70 level, so it is not until we break down below the level that I would even start to worry about the uptrend. Ultimately, this is a market that is bullish for the long term, and I believe that we have much further to go, perhaps as high as the 0.80 level. Obviously, that is a longer-term call, but I do think that is where we end up given enough time. I do not have a scenario in which a willing to sell the Australian dollar unless of course something drastic happens over at the Eccles building, but the Federal Reserve is very unlikely to change its tone anytime soon.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Forex Technical Analysis – Intraday Reaction to .7157 Sets the Tone

The Australian Dollar rose to a 15-month high early Wednesday, underpinned by a weaker U.S. Dollar, but capped by data that showed Australia’s consumer prices fell by a record in the second quarter. Traders are also waiting to hear from the Federal Reserve later in the session as the inability to contain the spread of coronavirus threatens to derail the country’s economic recovery.

At 10:36 GMT, the AUD/USD is trading .7179, up 0.0022 or +0.30%.

Australia’s consumer price index (CPI) dived 1.9% in the second quarter, from the first, causing annual prices to drop 0.3% in the first negative reading since 1998. Forecasts were for a fall of 2.0% and 0.4%, respectively. That news delivered a blow to the Reserve Bank of Australia (RBA), which had only just managed to get inflation back up into its 2-3% target band after years of sub-par readings.

The Fed is not expected to announce any major policy decisions on Wednesday. Officials may point to a pending shift this fall in how it views its inflation target, or begin setting explicit goals for the jobless rate or inflation to be met before it considers raising interest rates from the current near-zero level.

Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. The uptrend was reaffirmed earlier today when buyers took out the previous main top at .7182. A trade through .7064 will change the main trend to down.

Daily Swing Chart Technical Forecast

The uptrend will continue today when buyers take out the intraday high at .7194. This could trigger a surge into the February 21, 2019 main top at .7207. We could see a technical bounce on the first test of this level.

However, overcoming .7207 could trigger an acceleration to the upside. The daily chart indicates there is plenty of room to the upside with the January 31, 2019 main top at .7296 the next major upside target.

A close below .7157 will form a potentially bearish closing price reversal top. This won’t change the trend, but it could trigger the start of a 2 to 3 day correction.

Bulletproof Setups before the FOMC

Wednesday is all about the FOMC and many traders are anticipating some fireworks. Definitely, if you seek volatility, Dollar is a place to go right now but if not and you are very tight towards the risk, then try to avoid the USD at all costs. As always, we got you covered in both cases. In todays analysis, we prepared a pair with the American Dollar and two pairs without. Enjoy!

During crucial macro events, technical analysis does not always work, so you need to have this healthy skepticism towards using technicals before possible crazy movements. If you are still willing to trust the lines and dots, then we have a great setup on the AUDUSD. Todays price managed to break strong horizontal resistance on the 0.717. In theory, that gives a proper buy signal and as long as we are above, the sentiment is positive.

Now something for those who would like to avoid the USD today. EURCHF is creating a large double top formation and precisely speaking, we are in the process of finishing the second top. When we will look a little closer, you will see that the price also created a bearish flag formation and most recently, broke its lower line. From the technical point of view, movement towards the horizontal support and the neckline seems inevitable.

And now GBPNZD, where we have something for long-term position traders. Pair is currently bouncing from the ultra-important long-term up trendline. GBPNZD is doing that with a double bottom formation, which can be spotted on the daily chart and is totally confirmed by the divergence of various oscillators, like MACD and RSI. Future for this instrument looks pretty bright.

For a look at all of today’s economic events, check out our economic calendar.

Mid-Week Technical Outlook: Greenback Primed for Further Weakness

Other negative factors including worsening US-China tensions, uncertainty surrounding November’s presidential elections and shaky economic data have compounded to the Dollar’s pain and misery. With the Dollar Index (DXY) on track for its biggest one month decline since April 2011, it is fair to say that bears remain in the driving seat.

King Dollar could be instore for more punishment this evening if the Federal Reserve reinforces its dovish message and expresses concerns over the US economy. While the central bank is widely expected to keep interest rates unchanged at near zero, much of the attention will be directed towards the policy statement and speech by Fed Chairman Jerome Powell. Given how data from unemployment claims still remains a cause for concern, Powell may reiterate that the Fed will do whatever it can to support the recovery – meaning interest rates may be left at near-zero for even longer.

Looking at the technical picture, the DXY fulfills the prerequisites of a bearish trend on the daily timeframe. Prices are trading within a bearish channel, the MACD has crossed to the downside while the candlesticks are trading well below the 20 Simple Moving Average. If 94.00 proves to be reliable resistance, the DXY may slip back towards 93.50 and 93.00, respectively. A breakdown below 93.00 could open the doors back to levels not seen since August 2018 below 92.20.

USDJPY eyes 104.65 level

Yesterday we discussed the possibility of the USDJPY testing 104.65 after breaking below the 105.00 support level. Prices are under pressure on Wednesday morning and could trend lower if the Dollar weakens ahead of the Federal Reserve policy meeting. Sustained weakness below the 105.00 dynamic resistance could trigger a selloff towards 104.65 and 104.10.

USDCAD breakdown setup in play

The USDCAD is gearing for a breakdown below the 1.3350 on the daily timeframe. Prices are trading comfortably below the 20 and 50 Simple Moving Average while there have been consistently lower lows and lower highs. A solid breakdown below this support could trigger a decline straight towards 1.3200 which is 150 pips away.

AUDUSD rides higher on Dollar weakness

Expect the Australian Dollar to appreciating against a broadly weaker Dollar in the short term. The daily charts suggest that bulls still have some stamina with a breakout above 0.7150 opening a path towards 0.7300. If 0.7150 proves to be a stubborn resistance, prices may decline back towards the 0.6960 regions.

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Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Middle-Week Screening: Gold Glitters and Shines!

Overview and trends

US stocks rose on Monday as investors looked to major earnings on deck this week and awaited the release of the GOP’s coronavirus stimulus plan. Senate Majority Leader Mitch McConnell finally said that Republicans were ready to present their long-awaited $1 trillion COVID-19 package details, as Democrats remained wary. S&P 500 ended up 0.74%, while Dow Jones Industrial Average was higher 0.44%, and Nasdaq Composite shot up 1.86%.

US stock indices ended down from 0.65% to 1.27% yesterday as investors mulled Senate Republicans’ coronavirus stimulus package and a slew of very surprising earnings reports.

The U.S. republicans continued debating on its fiscal relief plan most of the day. The projected $1 trillion packages will include another round of $1,200 payment checks and additional funds for small-business loans.

A large portion of reporting yesterday companies sadly missed their earnings figures, with most disappointments coming from 3M, McDonald’s and even biotech Pfizer. Oil tumbled through the session, with West Texas Intermediate crude dropping as much as 1.5%, to $41.10 per barrel.

Gold was the leading instrument in the 1st half of trading week. Gold prices took a stratospheric leap last week, jumping from the previous week’s support test at $1800 an ounce to the $1900 level that hasn’t been traded since 2011.

Next day Gold jumped to a record high of $1944 per ounce, driven by an uptick in new U.S. coronavirus cases that have added to economic uncertainty. Shares of Moderna surged after the company said it received an additional $472 million in funding for its COVID-19 vaccine.

Trading ideas

According to a new court filing, multiple California state offices are actively investigating Amazon (AMZN) over worker safety concerns as the coronavirus continues to rage throughout the U.S. An eighth Amazon employee has died of COVID-19, and the virus has spread quickly through clusters of employees at factory floors and warehouses nationwide where social distancing isn’t enforced. Amazon’s own shipping centers have reported outbreaks, including one in the Pocono Mountains and another in Oregon.

The earnings date for Amazon is July 31, an overwhelming majority of high-profile analysts think the numbers will be as stellar as never before. Amazon’s average EPS estimate is $3.6 versus $5.01 it actually earned last quarter. It’s easy to guess that Amazon will beat that number indeed. However, even the bigger question will be how the tech giant is going to address these mounting allegations about poor safety of its employees. It looks like this time around it’s no longer just curiosity.

Global payments processor Visa reports earnings today, on July 29, and it will be more than just one more set of quarterly financial numbers. Investors will get a direct insight into how consumer spending is being affected by the pandemic and an uncertain economy. This quarter revenue for the payments processing giant are expected to drop by roughly 17% to $4.81 billion versus $5.84 billion a year ago. This anticipated drop has a lot to do with lower transaction volume as many stores were closed throughout the quarter. With that said, there is optimism for a potential beat driven by increased digital payment volume as more and more people shopped online.

Indeed, dealing with paper money has now become not only unsafe but also unsanitary. So VISA’s performance will be more or less accurately reflecting the real global consumer spending, and households’ entire propensity to consume, and how efficient the world’s largest central banks’ and governments’ efforts to offset the COVID-19 impact. So fasten your seatbelts!

The Australian dollar has rallied rather significantly on Monday, showing signs of life yet again as the U.S. dollar continues to get hammered against most currencies. Aussie pierced below 1.40 mark, and now this level became its support, rather than resistance level. A couple of times over the past several trading sessions it tried to approach it, but the big return looked invariably spectacular.

So, this level now can be seen as a cemented support for the Australian currency. Its further growth towards 1.35 is highly dependent on the continuation of the gold rally. Australia is the second-largest gold producer in the world with 325 tons per year, right after China. By the way, 2019 was a record year for Australian gold production.

So, the momentum the Australian currency has been gaining lately is not just a coincidence, and if greenback keeps getting softer, and metals keep getting stronger, it would be hard to find a better choice than to take a chance on the Aussie.

One of the less-talked-about but more potent beneficiaries of this year’s gold rally Kinross Gold (KGC) is scheduled to announce Q2 earnings results today, on July 29th, after market close.

The consensus EPS estimate is 13 cents and the consensus revenue estimate is around $1 billion (assuming a 20% growth Year-over-Year). Over the last 2 years, Kinross Gold has beaten EPS estimates 63% of the time and has beaten revenue estimates 50% of the time.

Kinross is gaining from higher production at its two main deposit fields, which already had shown strong momentum in this year’s first quarter. Strong production is likely to have continued in the second quarter. Further, gold prices have been soaring this year making it the most attractive safe-haven asset. Gold prices have gained around 13% in the second quarter — the highest quarterly percentage increase in more than four years.

by Vladimir Rojankovski, Grand Capital Chief Analyst

AUD/USD and NZD/USD Fundamental Daily Forecast – Aussie CPI Decline Points Toward Weak Outlook for Economy

The Australian and New Zealand Dollars are trading mixed early Wednesday as investors await the release of the latest policy moves by the U.S. Federal Reserve. The currencies are being supported by a weaker greenback as the U.S. struggles to contain a spike in coronavirus cases that threatens to derail a quick economic recovery. In other news, weaker than expected Australian consumer inflation helped cap prices that are currently hovering just under a 15-month high.

At 05:55 GMT, the AUD/USD is trading .7166, up 0.0009 or +0.12% and the NZD/USD is at .6656, down 0.0002 or -0.03%.

U.S. Federal Reserve Outlook

The harsh outlook for the world’s largest economy is expected to encourage Federal Reserve policymakers to stick to a dovish stance at its policy review, due to be released at 18:00 GMT. Australian Dollar bulls seem to be betting the Fed could hint at other ways to loosen policy down the road.

Investors will be watching the Fed announcements for any indications that the U.S. central bank will increase its purchases of longer-dated debt, implement yield caps or target higher inflation than it has previously indicated when it concludes its two-day meeting on Wednesday.

Australian Consumer Prices Fall in Second Quarter

Earlier in the session, the AUD/USD traded near its 15-month peak of .7182, but stepped back slightly after data showed Australia’s consumer prices fell by a record in the second quarter. The coronavirus pandemic is being blamed for causing one-off slides in the cost of child care and petrol, dealing a damaging setback to years of progress toward higher inflation.

The consumer price index (CPI) dived 1.9% in the second quarter, from the first, causing annual prices to drop 0.3% in the first negative reading since 1998. Forecasts called for a decline of 2.0% and 0.4% respectively.

Core measures of inflation that strip out the largest price moves were also subdued, with the trimmed mean dipping 0.1% for the first fall in its history. Annual core inflation slowed sharply to 1.2%, from 1.8% in the March quarter.

The news was a damaging blow to the Reserve Bank of Australia (RBA), which had only just managed to get inflation back up into its 2-3% target band after years of sub-par readings. Neither is the outlook favorable given the economy is almost certainly in its first recession since the early 1990s.

Daily Forecast

Short-term, the AUD/USD is bullish and could pop to more than 15-month highs later today if the Fed delivers a more-than-expected dovish stance.

Longer-term, the outlook is a bit gloomy with the RBA likely to be concerned that a run of low readings will drag down expectations of future inflation, lowering wage growth and making it harder to get prices up.

At its next meeting RBA policymakers are likely to address ways to prop up inflation after already cutting rates to a record low of 0.25% and taking the exceptional step of pledging to keep rates down for years to come in the hope of avoiding a drift toward damaging deflation.

Essentially, a dovish Fed should be supportive for the Aussie, but gains are likely to be capped as low inflation concerns move to the forefront.

For a look at all of today’s economic events, check out our economic calendar.

The Stimulus Package, COVID-19, and the FED Keep the Dollar in Focus

Earlier in the Day:

It’s was a relatively quiet start to the day on the economic calendar. The Aussie Dollar was in action in the early part of the day.

Away from the economic calendar, COVID-19 and the U.S stimulus package remained in focus ahead of the FED.

Looking at the latest coronavirus numbers

According to figures at the time of writing, the number of new coronavirus cases rose by 241,391 to 16,883,654 on Tuesday. On Monday, the number of new cases had risen by 229,469. The daily increase was higher than Monday’s rise and up from 240,565 new cases from the previous Tuesday.

Germany, Italy, and Spain reported 2,602 new cases on Tuesday, which was down from 7,167 new cases on Monday. On the previous Tuesday, 1,889 new cases had been reported.

From the U.S, the total number of cases rose by 64,799 to 4,498,209 on Tuesday. On Monday, the total number of cases had increased by 61,571. On Monday, 21st July, a total of 67,140 new cases had been reported.

For the Aussie Dollar

2nd quarter inflation figures were in focus in the early part of the day.

The annual rate of inflation came in at -0.3%, which was marginally better than a forecasted -0.4%. In the 1st quarter, the annual rate of inflation had stood at 2.20%. In the 1st quarter, the annual rate of inflation had accelerated from 1.8% to 2.20%. Quarter-on-quarter, consumer prices fell by 1.90%, following a 0.3% rise in the 1st quarter. Economists had forecast a 2.00% slide.

According to the ABS,

  • The June quarter slide was attributed to free child care (-95%), sliding automotive fuel prices (-19.3%), and a fall in pre-school and primary education prices (-16.2%). Excluding these, consumer prices would have risen by 0.1%.
  • Cleansing and maintenance price rose by 6.2%, with non-durable household products up by 4.5%.
  • There were also increases in prices for furniture (+3.8%), major household appliances (+3.0%), and audio, visual, and computing equipment (+1.8%).
  • In the June quarter, the quarter-on-quarter decline was the largest in the 72-year history of the CPI.
  • It was only the 3rd time since 1949 that the annual rate of inflation had turned negative.

The Aussie Dollar moved from $0.71645 to $0.71575 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.04% to $0.71575.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.03% to ¥105.14 against the U.S Dollar, with the Kiwi Dollar down by 0.11% to $0.6654.

The Day Ahead:

For the EUR

It’s another particularly quiet day ahead on the economic calendar. There are no material stats from the Eurozone to provide the EUR with direction.

The lack of stats will leave the EUR in the hands of COVID-19 updates and geopolitics. Late in the day, the FED is also in action later in the day.

From the U.S, the continued spike in new COVID-19 cases has weighed heavily on the Dollar. Any 2nd wave hitting EU member states beyond Spain would be a test the EUR.

At the time of writing, the EUR was up by 0.03% to $1.1720.

For the Pound

It’s yet another particularly quiet day ahead on the economic calendar. There are no material stats due out of the UK to provide the Pound with direction.

A lack of stats will continue to leave the Pound in the hands of Brexit and market risk sentiment.

At the time of writing, the Pound was down by 0.11% to $1.2918.

Across the Pond

It’s another relatively busy day ahead for the U.S Dollar. June pending home sales and goods trade figures are due out later today.

The stats will likely have a muted impact on the Dollar and risk sentiment, however. For the Dollar and the broader market, the FOMC monetary policy decision and press conference is the main event.

Away from the calendar, the U.S stimulus package, tensions between the U.S and China, and COVID-19 will remain in focus.

At the time of writing, the Dollar Spot Index was up by 0.10% to 93.788.

For the Loonie

It’s another particularly quiet day ahead on the economic calendar. There are no material stats due out of Canada to provide the Loonie with direction.

A lack of stats will leave the Loonie in the hands of the weekly EIA crude oil inventory numbers and market risk sentiment.

The key to the U.S economy and its trading partners is the passing of the latest COVID-19 stimulus package. Any further delays would further limit the upside in the Loonie.

At the time of writing, the Loonie was down by 0.01% to C$1.3381 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Price Forecast – Australian Dollar Consolidating

The Australian dollar has gone back and forth during the trading session on Tuesday, as we are sitting at the 0.7150 area. I think eventually we go breaking higher but let us be honest here: the Australian dollar is probably a bit tired after rallying the way it has over the last couple of months. Regardless though, it is obvious that the US dollar is on its back foot against just about everything out there, so the Aussie will not be any different. With that being said, I like the idea of buying dips and I think that the 0.70 level could offer a bit of a floor in the current market environment.

AUD/USD Video 29.07.20

To the upside, I believe that the market probably finds plenty of interest if we can break above the 0.72 handle, as it would open up the door to reaching towards the 0.80 level over the longer term. That is my thesis at the moment, that the Aussie continues to benefit from the Federal Reserve’s loose monetary policy more than anything else. Gold is rallying which of course helps the Australian dollar as well but at the end of the day this is probably more about the Federal Reserve than anything else. There is also the China play, but that seems to be a bit of a mixed bag at the moment so I would not read too much into that the Chinese correlation, at least in the short term.

For a look at all of today’s economic events, check out our economic calendar.

Dollar Bounces, Gold Slips, while Equities Hold Their Own

In the emerging market space, the liquid and accessible currencies, like the Turkish lira, Mexican peso, and Russian rouble, are down the most. The lira has fallen 1% after intrasession volatility that pushed it to a record low against the euro yesterday. That seems to be the source of the pressure on the lira against the dollar.

The South African rand is among the weakest among emerging market currencies today even though the IMF approved a $4.3 bln loan, the most granted so far to assist in combatting the virus. Despite the correction in the foreign exchange market, equities are mostly firm. In the Asia Pacific region, only a few markets could not sustain gains.

Japan, Taiwan, and Australia were among them. South Korea led the region with a nearly 1.8% gain. Europe’s Dow Jones Stoxx 600 is up almost 0.5% after falling for the past two sessions (~2%). US shares are little changed. US bond yields backed up yesterday, with the 10-year yields popping back above 60 bp. This exerted upward pressures in Asia and Europe. Gold reached $1981 before the profit-taking pushed it to about $1907 from where it is recovering. September WTI is little changed around $41.50 a barrel.

Asia Pacific

China is resorting to local lockdowns to combat the new outbreak in the virus. The 61 cases reported Monday were the most in four months. Separately, New Zealand became the latest country to suspend the extradition treaty with Hong Kong. That means that of the intelligence-sharing Five Eyes, only the US has not done so, though it has threatened to do so.

India has banned almost 50 Chinese apps to largely check the workaround the 59 apps banned last month. Another 250 apps are under review. India has cited threats to user privacy and national security. This is a new front in the confrontation with China. The US and Japan are considering their own bans on some Chinese apps.

The dollar is in a quarter of a yen range on either side of JPY105.45, as it is confined to yesterday’s range. The upside correction does not appear over, and the greenback could test previous support and now resistance near JPY106, where an option for $600 mln expires today (and a $1.8 bln option expires Thursday).

The Australian dollar is little changed as it moves within the $0.7065-$0.7180 range that has confined it for around a week now. It has held above $0.7115 today, but it may be retested. The PBOC set the dollar’s reference rate at CNY6.9895 today, nearly spot on where the models suggested. After falling to a four-day low near CNY6.9870, the dollar recovered back above CNY7.0. China seems intent on not allowing the US to get an advantage by devaluing the dollar, something that President Trump has advocated. A stable dollar-yuan rate in a weak dollar environment means that the yuan falls against the CFETS basket. Against the basket, the yuan is at its lowest level in a little more than a month.

Europe

News from Europe is light and the week’s highlights which include the first look at Q2 GDP (median forecast in the Bloomberg survey is for a 12% quarterly contraction), June unemployment (~7.7% vs. 7.4%), and the first look at July CPI (median forecast is for a 0.5% decline for a 0.2% increase year-over-year) still lie ahead.

Today’s focus is mostly on earnings and bank earnings in particular. European banks are being encouraged to extend the hold off of dividend payout and share buybacks that were first introduced in March. This may be worth around 30 bln euros. The UK is fully aboard too. In terms of loan-loss provisioning, European banks are expected to set aside around the same amount as they did in Q1, which was about 25 bln euros. In comparison, the five largest US banks have added a little more than $60 bln in the first half to cushion sour loans.

Fitch lowered its five-year growth potential for the UK from 1.6% to 0.9%. It also took EMU’s potential to 0.7% from 1.2%. This could weaken the resolve of asset managers, where industry surveys suggest a desire to be overweight European stocks and the euro on ideas of economic and/or earnings outperformance. That said, the number of analyst upgrades has surpassed the number of downgrades in Europe for the first time this year.

The euro reached $1.1780 yesterday. As the momentum stalled in Asia, some light profit-taking has been seen that saw it briefly dip just below $1.17 in early European turnover. Intraday resistance is seen near $1.1740-$1.1750. In the recent move, the session high has often been recorded in North America, and we’ll watch to see if the pattern holds today. The market may turn cautious ahead of tomorrow’s outcome of the FOMC meeting.

Sterling poked above $1.29 yesterday for the first time in four months. It made a marginal new high today (~$1.2905), but it too is consolidating. Support is seen in the $1.2830-$1.2850 area. As the euro was trending higher against the dollar yesterday, it also rose to about CHF1.0840, its highest level here in July. However, today’s consolidation has seen the euro slip back to around CHF1.0775. Look for it to find support above CHF1.0760.

America

The US reports house prices, Conference Board consumer confidence, and the Richmond Fed’s July manufacturing survey. Even in the best of times, these are not the typical market movers. The focus instead is three-fold: corporate earnings (today’s highlights include McDonald’s, Pfizer, and 3M), the negotiation over the fiscal bill, and the start of the FOMC meeting. Canada has not economic reports, while Mexico’s weekly reserve figures are due. It continues to gradually accumulate reserves. They have risen by about 4.5% this year after a 3.5% increase last year.

The Economic Policy Institute estimates that a cut in the $600 a week extra unemployment insurance to $200 a week will reduce aggregate demand and cut the number of jobs that were projected to be created. It expects a loss of about 2.5% growth and 3.4 mln fewer jobs. After this week’s FOMC meeting and the first look at Q2 GDP, the US July employment report is due at the end of next week.

It is one of the most difficult high-frequency economic reports to forecast. Still, the outlook darkened after last week’s increase in weekly initial jobless claims, which covered the week that the non-farm payrolls survey is conducted. Another increase, which is what the median forecast in the Bloomberg survey expects, is only momentarily going to get lost in the excitement around the GDP report.

The relatively light news day allows us to look a little closer at Mexico’s June trade data that was out yesterday. Mexico reported a record trade surplus of $5.5 bln. Yet, it is not good news. Mexico is hemorrhaging. The IGAE May economic activity index, reported at the end of last week, showed a larger than expected 22.73% year-over-year drop. The 2.62% decline in the month was nearly three times larger than economists forecast. With the virus still not under control, the government’s forecast for a 9.6% contraction this year is likely to be overshot. The record trade surplus was a function of a larger decline in imports (-23.2%) than exports (-12.8%).

Auto exports are off more than a third (34.6%) this year, to $47.5 bln. Other manufactured exports are down 3.4% to $113.8 bln. Petroleum exports have fallen by nearly 42% in H1 to $8.0 bln. Agriculture exports edged up by 7.3% to $10.5 bln to surpass oil. The peso’s strength reflects not the macroeconomy but its high real and nominal interest rates in the current environment. Yesterday, the dollar fell below MXN22.00 for the first time this month. The June low was near MXN21.46.

The US dollar initially extended its losses against the Canadian dollar, slipping to CAD1.3330, just ahead of last month’s low (~CAD1.3315) before rebounding to almost CAD1.3400. The upside correction could run a bit further, but resistance in the CAD1.3420-CAD1.3440 area may offer a sufficient cap today. The greenback found support against the Mexican peso near MXN21.90 and bounced back to around MXN22.07. Resistance is seen near MXN22.20. The peso is up about 4.5% this month, but within the region has been bettered by Chile (~+6.75%) and Brazil (~+6.15%). The Colombian peso’s almost 2..2% gain puts it in the top 10 best performing emerging market currencies so far this month.

For a look at all of today’s economic events, check out our economic calendar.

AUD/USD Forex Technical Analysis – Trend Changes to Down on Trade Through .7064

The Australian Dollar is easing a little against the U.S. Dollar on Tuesday as traders seem a little reluctant to buy so close to a multi-year high and ahead of the Fed’s monetary policy decisions on Wednesday and as the U.S. Congress moves closer to another massive stimulus plan. However, we expect the Aussie to continue to track market sentiment, ahead of U.S. economic releases.

At 09:15 GMT, the AUD/USD is trading .7141, down 0.0008 or -0.11%.

The Aussie is likely taking a pause with the reasons for the U.S. Dollar’s broad decline, especially falling real yields, still intact, but the pace of the plunge will probably slow with a Fed meeting and a U.S. spending package in the offing.

Buyers could also be letting up ahead of Wednesday’s Australian consumer inflation reports. 

Daily AUD/USD

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .7182 will signal a resumption of the uptrend. Today’s intraday high is .7177. The main trend will change to down on a move through .7064.

The minor range is .7182 to .7064. Its 50% level at .7123 is providing support on Tuesday.

The second minor range is .6963 to .7182. Its 50% level at .7072 is the next potential support level.

The short-term range is .6833 to .7182. Its retracement zone at .7007 to .6966 is key support. This zone is controlling the near-term direction of the AUD/USD.

Daily Swing Chart Technical Forecast

Based on the early price action, the direction of the AUD/USD the rest of the session on Tuesday is likely to be determined by trader reaction to .7123.

Bullish Scenario

A sustained move over .7123 will indicate the presence of buyers. If this move creates enough upside momentum then look for a retest of the intraday high at .7177.

Taking out .7177 will likely fuel a breakout over .7182. This could lead to a test of the April 17 main top at .7206.

Bearish Scenario

A sustained move under .7123 will signal the presence of sellers. This could trigger an acceleration into .7072 to .7064. Since the main trend is up, buyers are likely to come in on a test of this area as traders attempt to defend the uptrend.

For a look at all of today’s economic events, check out our economic calendar.