The Reserve Bank of Australia, as widely expected, kept its key interest rate unchanged at 1.00% which kept the Australian Dollar at support levels near a decade low. Despite the ongoing trade war, the economic dependence on China and the overall slowing global economy, Australia managed to print a better than expected current account surplus in the second-quarter while the first-quarter deficit was revised higher. Consumer confidence rose in the latest weekly survey, but retail sales for July posted a surprise contraction. Did bulls get enough data to move the AUDUSD to the upside off of strong support levels or will bears attempt a breakdown? Today’s fundamental analysis will take a look at both upside potential as well as downside risk.
Forex traders will get the key ISM Manufacturing Index out of the US. Economists anticipate it to remain above 50 and indicate expansion, but the Markit Manufacturing PMI already moved below that mark and is indicating a contraction in the manufacturing sector. Will the ISM Manufacturing Index follow suit? The New Orders component is dangerously close to dip below 50 and the Employment component is also slipping. The US Dollar has remained strong as forex traders started to view it as a safe haven trade amidst the global turmoil. How much longer can the US Dollar remain elevated as the US Fed is eyeing to ease monetary policy further? Which impact will this have on the AUDUSD? 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 ANZ Roy Morgan Weekly Consumer Confidence Index: The Australian ANZ Roy Morgan Weekly Consumer Confidence Index for the week of September 1st was reported at 114.4. Forex traders can compare this to the Australian ANZ Roy Morgan Weekly Consumer Confidence Index for the week of August 25th which was reported at 114.1.
- Australian Current Account Balance: The Australian Current Account Balance for the second-quarter was reported at A$5.9B. Economists predicted a figure of A$1.5B. Forex traders can compare this to the Australian Current Account Balance for the first-quarter which was reported at -A$1.1B. Australian Net Exports of GDP for the second-quarter increased by 0.6% quarterly. Economists predicted an increase of 0.3% quarterly. Forex traders can compare this to Australian Net Exports of GDP for the first-quarter which increased by 0.2% quarterly.
- Australian Retail Sales: Australian Retail Sales for July decreased by 0.1% monthly. Economists predicted an increase of 0.2% monthly. Forex traders can compare this to Australian Retail Sales for June which increased by 0.4% monthly. Australian Retail Sales excluding Inflation for the second-quarter increased by 0.2% quarterly. Economists predicted an increase of 0.3% quarterly. Forex traders can compare this to Australian Retail Sales excluding Inflation for the first-quarter which decreased by 0.1% quarterly.
- Australian RBA Interest Rate Decision: The Australian RBA left interest rates unchanged at 1.00%. Economists predicted no change in the interest rate. Forex traders can compare this to the previous Australian RBA Interest Rate Decision where interest rates were left unchanged at 1.00%.
Here are the key factors to keep in mind today for US Dollar trades:
- US Markit Manufacturing PMI: The Final US Markit Manufacturing PMI for August is predicted at 49.9. Forex traders can compare this to the previous US Markit Manufacturing PMI for August which was reported at 49.9.
- US ISM Manufacturing Index: The US ISM Manufacturing Index for August is predicted at 51.3. Forex traders can compare this to the US ISM Manufacturing Index for July which was reported at 51.2. ISM Prices Paid for August are predicted at 45.8. Forex traders can compare this to ISM Prices Paid for July which were reported at 45.1. ISM Employment for August is predicted at 51.5. Forex traders can compare this to ISM Employment for July which was reported at 51.7. ISM New Orders for August are predicted at 50.6. Forex traders can compare this to ISM New Orders for July which were reported at 50.8.
- US Construction Spending: US Construction Spending for July is predicted to increase by 0.3% monthly. Forex traders can compare this to US Construction Spending for June which decreased by 1.3% monthly.
Should price action for the AUDUSD remain inside the or breakout above the 0.6675 to 0.6745 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 0.6715
- Take Profit Zone: 0.7020 – 0.7080
- Stop Loss Level: 0.6635
Should price action for the AUDUSD breakdown below 0.6675 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 0.6635
- Take Profit Zone: 0.6365 – 0.6420
- Stop Loss Level: 0.6675
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