New home loans as well as investment lending in Australia increased above expectations for July which added bullish momentum to the Australian Dollar. June’s data was also revised higher. China reported a smaller than expected trade surplus for August as exports posted a surprise contraction while imports decreased. This was largely due to a sharp contraction in exports to the US as a result of the trade war the Trump administration intensified over the past few weeks. China is shifting its focus to its growing domestic economy as a result, exports account for roughly 20% of its GDP and this number is expected to shrink further. Is bullish momentum in the AUDNZD strong enough for a breakout? This morning’s fundamental analysis will take a look at where price action may be headed next.
New Zealand reported a contraction in second-quarter manufacturing activity as well as manufacturing volume, almost reversing the first-quarter gains. This has resulted in first-half manufacturing activity grinding to a near standstill in the latest sign that the global economy is cooling off fast and heading towards a recession. The New Zealand Dollar came under mild selling pressure following the release of the data which kept the AUDNZD hovering inside of its horizontal resistance area. Can bulls push for a breakout and extend the rally? Subscribe to the PaxForex Daily Fundamental Analysis and take the profitable side of this trade.
Here are the key factors to keep in mind today for Australian Dollar trades:
- Chinese Trade Balance: The Chinese Trade Balance for August was reported at $34.84B. Economists predicted a figure of $42.80B. Forex traders can compare this to the Chinese Trade Balance for July which was reported at $44.58B. Exports for August decreased by 1.0% annualized and Imports decreased by 5.6% annualized. Economists predicted an increase of 2.1% and a decrease of 6.3%. Forex traders can compare this to Exports for July which increased by 3.3% annualized and to Imports which decreased by 5.3% annualized.
- Australian Home Loans and Investment Lending: Australian Home Loans for July increased by 4.2% monthly. Economists predicted an increase of 1.5% monthly. Forex traders can compare this to Australian Home Loans for June which increased by 0.6% monthly. Australian Investment Lending for July increased by 4.7% monthly and the Owner-Occupier Loan Value increased by 5.3% monthly. Economists predicted an increase of 1.5% and a decrease of 1.0%. Forex traders can compare this to Australian Investment Lending for June which increased by 0.9% monthly and to Owner-Occupier Loan Value which increased by 4.1% monthly.
Here is the key factor to keep in mind today for New Zealand Dollar trades:
- New Zealand Manufacturing Activity and Manufacturing Volume: New Zealand Manufacturing Activity for the second-quarter decreased by 0.7% quarterly and Manufacturing Volume decreased by 2.7% quarterly. Forex traders can compare this to New Zealand Manufacturing Activity for the first-quarter which increased by 1.0% quarterly and to Manufacturing Volume which increased by 2.0% quarterly.
Should price action for the AUDNZD remain inside the or breakout above the 1.0630 to 1.0705 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1.0660
- Take Profit Zone: 1.0920 – 1.0990
- Stop Loss Level: 1.0615
Should price action for the AUDNZD breakdown below 1.0630 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1.0570
- Take Profit Zone: 1.0385 – 1.0450
- Stop Loss Level: 1.0630
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