1. Building Approvals: Tuesday, 1:30. This key construction indicator tends to show sharp swings. After two declines, the indicator rebounded in June, with a gain of 0.7%, above the estimate of 0.0%. The estimate for July stands at 0.2%.
  2. Chinese Manufacturing PMI: Wednesday, 1:00. The Aussie is sensitive to key Chinese data, as China is Australia’s largest trading partner. Manufacturing PMI has reeled off two straight readings of 49.4, pointing to stagnation in manufacturing. The forecast for July is 49.6 points.
  3. Inflation Data: Wednesday, 1:30. CPI slipped to a flat zero in Q2, down from 0.5% in Q1. Trimmed Mean CPI, which excludes the most volatile items. This indicator fell to 0.3%, its lowest level since Q1 of 2016.
  4. AIG Manufacturing Index: Wednesday, 22:30.  The index has been losing ground in recent months and dropped to 49.4 in June. This points to stagnation in manufacturing. Will the downward trend continue in July?
  5. Chinese Caixin Manufacturing PMI: Thursday, 1:45. The Caixin PMI was identical to the official manufacturing PMI in June, and has the same estimate for July of 49.6.
  6. Retail Sales: Friday, 1:30. Retail sales is the primary gauge of consumer spending and should be treated as a market mover. In May, retail sales posted a small gain of 0.1%, shy of the forecast of 0.2%. The June estimate stands at 0.3%.

*All times are GMT

AUD/USD Technical Analysis


Technical lines from top to bottom:

We start at 0.7340, which has held in resistance since early December.

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.

The pair broke through 0.7022 early in the week.

0.6940 also switched to resistance as AUD/USD dropped sharply last week.

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.

0.6627 is the final support level for now.

I remain bearish on AUD/USD

The Aussie took a plunge last week, and the downward trend could continue. The Chinese economy has been losing steam and the RBA has been chopping rates in an effort to stimulate the Australian economy. With the U.S.-China trade spat showing no signs of progress, the Aussie could face more headwinds.

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