AUD/USD drifted throughout the week and was almost unchanged. The upcoming week has two events, highlighted by the RBA minutes. Here is an outlook at the highlights and an updated technical analysis for AUD/USD.
The National Australia Bank Business Confidence index sagged to -14, down from +1. Consumer confidence also remained weak, as Westpac Consumer Confidence declined by 9.5%, marking a second straight drop. There was excellent news from the employment front, as the economy created 114.7 thousand jobs, compared to the forecast of 30.0 thousand. The unemployment rate rose from 7.4% to 7.5%, beating the estimate of 7.8%.
In the US, consumer inflation was unchanged at 0.6% in July. The core reading improved to 0.6%, up from 0.2% beforehand. There was good news on the employment front, as unemployment claims fell to 963 thousand, down from 1.186 million. This marked the first time that new claims have fallen below the 1-million mark since mid-March, before the spread of Covid-19. Retail sales reports were mixed. The core reading came in at 1.9%, above the estimate of 1.3%. However, the headline read posted a gain of 1.2%, shy of the estimate of 2.0%.
- RBA Monetary Policy Meeting Minutes: Tuesday, 1:30. The RBA minutes provide details of the policy meeting held earlier this month. At the meeting, the bank maintained rates at 0.25%, where it has been pegged since March. The bank’s rate statement warned that the economic outlook remains highly uncertain in the wake of the Covid-19 pandemic. A dovish tone from the minutes could weigh on the Aussie.
- MI Leading Index: Wednesday, 12:30. The Melbourne Institute indicator improved to 0.4% in June, after a gain of 0.2% beforehand. Will the upward trend continue in July?
AUD/USD Technical Analysis
Technical lines from top to bottom:
We start with resistance at 0.7513, which has held since June 2018.
The round number of 0.74 is next.
0.7315 has held since December 2018.
0.7250 is the next resistance line.
0.7165 is fluid. Currently, it is an immediate support level.
0.7056 is providing support.
0.6983 is next.
0.6825 (mentioned last week) switched to support in early June, when AUD/USD started a major rally. It is the final support line for now.
I am neutral on AUD/USD
The Aussie has taken an extended pause after sparkling against the greenback. With some parts of Australia under lockdown due to Covid-19, investors may remain cautious towards AUD/USD.
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