The Australian construction sector continues to contract, partially due to seasonality. The ongoing slowdown has resulted in a slump in demand for home loans while investment lending also contracted. On the bright side, the value of loans increased. The Australian Dollar is in the middle of a price action recovery from depressed levels and the interest rate cut by the RBA added to bullish sentiment in a rare contrarian effect. Today’s fundamental analysis will take a look at will impact the AUDUSD currency pair.
Here are the key factors to keep in mind today for Australian Dollar trades:
- Australian AiG Performance of Construction Index: The Australian AiG Performance of Construction Index for May was reported at 40.4. Forex traders can compare this to the Australian AiG Performance of Construction Index for April which was reported at 42.6.
- Australian Home Loans and Investment Lending: Australian Home Loans for April decreased by 1.1% monthly. Economists predicted a flat reading of 0.0% monthly. Forex traders can compare this to Australian Home Loans for March which decreased by 2.6% monthly. Australian Investment Lending for April decreased by 2.2% monthly and the Value of Loans increased by 1.0% monthly. Forex traders can compare this to Australian Investment Lending for March which decreased by 2.4% monthly and to the Value of Loans which decreased by 3.1% monthly.
All eyes will be on today’s NFP report and forex trading activity is expected to be muted until after the release. Expectations call for a solid headline figure, but with unemployment at decade lows, analysts may look to average hourly earnings in order to gauge inflationary pressures from the wage index. Inflation has been absent, but after last months 3.6% annualized increase in wages which is expected to be matched by May’s data, it will be important to keep a close eye on this sub-component. Will the US Dollar get the data it needs to rally?
Here are the key factors to keep in mind today for US Dollar trades:
- US NFP Report: The US NFP Report for May is predicted to show 175K job additions and an unemployment rate of 3.6%. Forex traders can compare this to the US NFP Report for April which showed 263K job additions and an unemployment rate of 3.6%. Private Payrolls for May are predicted to show 174K job additions and Manufacturing Payrolls 3K job additions. Forex traders can compare this to Private Payrolls for April which showed 236K job additions and Manufacturing Payrolls which showed 4K job additions. The Average Work Week for May is predicted at 34.5 hours. Forex traders can compare this to the Average Work Week for April which was reported at 34.4 hours. Average Hourly Earnings for May are predicted to increase by 0.3% monthly and by 3.6% annualized. Forex traders can compare this to Average Hourly Earnings for April which increased by 0.2% monthly and by 3.6% annualized. The Labor Force Participation Rate for May is predicted at 62.8%. Forex traders can compare this to the Labor Force Participation Rate for April which was reported at 62.8%.
- US Wholesale Inventories and Trade Sales: US Final Wholesale Inventories for April are predicted to increase by 0.7% monthly. Forex traders can compare this to previous US Wholesale Inventories for April which increased by 0.7% monthly. US Wholesale Trade Sales for April are predicted to increase by 0.2% monthly. Forex traders can compare this to US Wholesale Trade Sales for March which increased by 2.3% monthly.
- US Consumer Credit: US Consumer Credit for April is predicted at $13.000B. Forex traders can compare this to US Consumer Credit for March which was reported at $10.281B.
Should price action for the AUDUSD remain inside the or breakout above the 0.6955 to 0.6990 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 0.6975
- Take Profit Zone: 0.7160 – 0.7210
- Stop Loss Level: 0.6900
Should price action for the AUDUSD breakdown below 0.6955 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 0.6940
- Take Profit Zone: 0.6800 – 0.6860
- Stop Loss Level: 0.6975
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