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Aud-Usd, Time to Sell?

Aud-Usd, forex, trading forex, forex with fundamental analysis

Aud-Usd, forex, trading forex, forex with fundamental analysisIn this bored Sunday of January, I analyse AUD-USD that presents interesting aspects. I start with a fundamental analysis of the economies that make up the currency pair.

I do an analysis through the macroeconomic data.

As for Australia in the last year, there has been a marked improvement in the labour market with an unemployment rate dropped by half a percentage point from April to December. Inflation remains slightly below the target while the retail sales data does not yet show a marked recovery in consumption.

Analysing the data of the United States, there has been a continuous improvement of data on work. The unemployment rate fell to 4.1%. However, the new employment created were not matched by an increase in wages in the last months of 2017. Last months of 2017 that have seen an increase in the retail sales.

Below you can read the most significant passages of the last Royal Bank of Australia and FOMC statement.

Royal Bank of Australia: “The outlook for non-mining business investment has improved further, with the forward-looking indicators being more positive than they have been for some time. Increased public infrastructure investment is also supporting the economy.

Employment growth has been strong over 2017, and the unemployment rate has declined. Employment has been rising in all states and has been accompanied by a rise in labour force participation.

There are reports that some employers are finding it more difficult to hire workers with the necessary skills. However, wage growth remains low, and this means there is uncertainty in the outlook for household consumption. Household incomes are growing slowly, and debt levels are high.

The Australian dollar remains within the range that it has been in over the past two years. An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast.

FOMC: “The labour market has continued to strengthen and that economic activity has been rising at a solid rate. Averaging through hurricane-related fluctuations, job gains have been solid, and the unemployment rate declined further.

Household spending has been expanding at a moderate rate. On a 12-month basis, both overall inflation and inflation for items other than food and energy have declined this year and are running below 2 percent.

The Committee continues to expect that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labour market conditions will remain strong.

Very interesting the Economic Projections released by FOMC and that you can see below.

Economic Projections, fomc, fed, federal reserve

 

Revised the GDP upwards not only for 2017 but also for the following years, in particular for 2018; it went from a forecast of 2.1 in September to one of 2.5 in December. The unemployment rate has also been revised downwards, again for all the years. The projections of three rate hikes in the United States for 2018 (Federal funds rate expected at 2.1) has been confirmed. For the latter data, however, it should be considered that next month there will be the succession as chair of the Federal Reserve, from Janet Yellen to Jerome Powell. This, of course, generates some uncertainty.

After the fundamental analysis of Aud-Usd, let's take the chart (below).

AUD-USD, australian dollar, us dollar

 

The last consideration: the commodities. In particular the gold. From half December, Aud-Usd started a steep bullish trend exactly like the gold whose future you can see in the chart below.

Gold, gold future

 

Gold is close to a resistance ($ 1,335), and a breakout of that level will push upwards, most likely, Aud-Usd as well. Concerning the commodities in general, it is possible a positive year for them, even though the inflation is still below 2% almost everywhere. An increase would help a bullish movement of the sector.

Conclusion. Aud-Usd, thanks to the gold and the employment data, in the last month has made a strong bullish movement. The situation compared to a few months ago has not changed a lot and only a rally of the gold could push the currency pair to overcome the resistance at 0.80400 area (however, they are possible false breakouts).

Friday, in the chart, was formed a "Shooting Star", a Candlestick reversal pattern, it could be the prelude, at least, of a retracement of Aud-Usd. But as I said, be very careful to the gold (and to the strong speculation right now on AUD). Bearish targets: 0.7880/0.7860 – 0.7730/0.7710 – 0.7630/0.7600 – 0.7500,

If you are interested in Forex market you can read other articles and analyses, and all the last Central Banks reports. You can learn more about the Fundamental Analysis in Forex with my e-Book.

 

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