The Australian manufacturing sector steepened its recession, but annualized inflation increased unexpectedly. Building approvals rose on an annualized level, but contracted monthly, followed by a smaller increase in house prices. The AUDCHF collapsed into a significant horizontal support area. Will bears push this currency pair into new multi-decade lows, or will bulls step in and reverse price action? Today’s fundamental analysis will take a look at price action in both directions.
Forex traders will get the Swiss manufacturing PMI for January. The SNB has allowed the Swiss Franc to correct, but it may feel forced to interfere as it has done many times before. The coronavirus is expected to apply downside pressure on the global economy, and strain the supply chain. How will this impact the AUDCHF? Will safe-haven demand for the Swiss currency keep the sell-off going, or will bulls take advantage of oversold conditions? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Here are the key factors to keep in mind today for Australian Dollar trades:
- Australian AiG Performance of Manufacturing Index: The Australian AiG Performance of Manufacturing Index for January was reported at 45.4. Forex traders can compare this to the Australian AiG Performance of Manufacturing Index for December, which was reported at 48.3.
- Australian CoreLogic House Prices: Australian CoreLogic House Prices for January increased by 0.9% monthly. Forex traders can compare this to Australian CoreLogic House Prices for December, which increased by 1.2% monthly.
- Australian TD Securities Inflation: Australian TD Securities Inflation for January increased by 0.3% monthly and by 1.8% annualized. Forex traders can compare this to Australian TD Securities Inflation for December, which increased by 0.3% monthly and 1.4% annualized.
- Australian Building Approvals: Australian Building Approvals for December decreased by 0.2% monthly, and increased by 2.7% annualized. Economists predicted a decrease of 5.0% monthly and 1.4% annualized. Forex traders can compare this to Australian Building Approvals for November, which increased by 10.9% monthly, and which decreased by 2.8% annualized.
- Australian ANZ Job Advertisements: Australian ANZ Job Advertisements for January increased by 3.8% monthly. Forex traders can compare this to Australian ANZ Job Advertisements for December, which decreased by 5.7% monthly.
- Chinese Industrial Profits: Chinese Industrial Profits for December decreased by 6.3% annualized. Forex traders can compare this to Chinese Industrial Profits for November, which increased by 5.4% annualized.
- Chinese Caixin Manufacturing PMI: The Chinese Caixin Manufacturing PMI for January was reported at 51.1. Economists predicted a figure of 51.0. Forex traders can compare this to the Chinese Caixin Manufacturing PMI for December, which was reported at 51.5.
Here is the key factor to keep in mind today for Swiss Franc trades:
- Swiss Manufacturing PMI: The Swiss Manufacturing PMI for January is predicted at 50.3. Forex traders can compare this to the Swiss Manufacturing PMI for December, which was reported at 50.2.
Should price action for the AUDCHF remain inside the or breakdown below the 0.6400 to 0.6485 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 0.6460
- Take Profit Zone: 0.5985 – 0.6100
- Stop Loss Level: 0.6525
Should price action for the AUDCHF breakout above 0.6485 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 0.6525
- Take Profit Zone: 0.6620 – 0.6675
- Stop Loss Level: 0.6485
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