- Chinese Manufacturing PMI: Sunday, 1:00. The Aussie is sensitive to key Chinese data, as China is Australia’s largest trading partner. Manufacturing PMI slowed to 49.4 in June, shy of expectations. This points to contraction.
- AIG Manufacturing Index: Sunday, 22:30. The index has been above the 50-level throughout 2019, which points to expansion. In May, the index slowed to 52.7. Will we see an improvement in June?
- MI Inflation Gauge: Monday, 1:00. This Melbourne Institute indicator helps analysts track inflation on a monthly basis. Inflation has been dropping and fell to a flat zero in May. Low inflation levels are a concern as they are well below the RBA target of 2%.
- Chinese Caixin Manufacturing PMI: Monday, 1:45. In May, the Caixin PMI was a bit stronger than the official manufacturing PMI, with a reading of 50.2. Little change is expected in June, with a forecast of 50.1.
- RBA Rate Decision: Tuesday, 4:30. The RBA lowered rates to 1.25% at the June meeting, and the markets are expecting another quarter-point cut this week. If the RBA cuts rates again, traders can expect the Aussie to lose ground.
- AIG Services Index: Tuesday, 22:30. In May, the index pushed above 50, after four successive readings in contraction territory.
- Building Approvals: Wednesday, 1:30. This key construction indicator tends to show sharp swings, and has recorded two straight declines. The May forecast stands at zero.
- Trade Balance: Wednesday, 1:30. Australia’s trade surplus dropped slightly in April, coming in at A$4.87 billion, shy of the estimate of $5.05 billion. The markets are expecting a rebound in May, with an estimate of $5.25 billion.
- Retail Sales: Thursday, 1:30. . Retail sales is the primary gauge of consumer spending and should be treated as a market mover. The indicator was unexpectedly soft in April, with a decline of 0.1%. This missed the estimate of 0.2%. The estimate for May remains at 0.2%.
- AIG Construction Index: Thursday, 22:30. The index has mired in contraction territory since August, with nine straight readings below the 50-level. Another reading indicating contraction is expected in June.
Technical lines from top to bottom:
The round number of 0.74 was the high point reached at the wake of December. This is followed by 0.7340, which the pair breached in late November.
0.7315 was a swing high seen in late September.
0.7240 separated ranges in September and in October.
0.7165 (mentioned last week) has held in resistance since early April.
0.7085 was a low point in September.
0.7022 is under pressure as AUD/USD touched a high of 0.7021 last week.
0.6988 switched to a support level after strong gains by AUD/USD. It marked the low point in April.
0.6864 was a low point in May.
0.6744 was a low point in January.
0.6686 was a cap back in January 2000.
0.6547 was an important resistance line back in December 2008.
I remain bearish on AUD/USD
The RBA will be in focus this week, with the markets expecting a second rate cut in as many weeks. Although the rate cut has been priced in, there is a strong chance that the Aussie will lose ground. A dovish rate statement could also weigh on the currency.
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