Fundamental Analysis of AUDUSD for January 24, 2019

AUD/USD is currently drifting lower towards 0.7000-50 support area after being rejected off the 0.7200 with corrections and volatility. Despite a positive employment reports from Australia today, AUD failed to regain momentum over USD which is also facing some headwinds like the government shutdown and soft economic results.

Today Australia's Employment Change report was published with a decrease to 21.6k which was better than the forecast for a 17.3k decline, down from the previous figure of 39.0k. Besides, Unemployment Rate edged down to 5.0%, better than the forecast with the flat reading of 5.1%. Though the employment change report was better than expected, it nearly decreased by 50% from the previous figure which hurt the economy to a certain extent. The Reserve Bank of Australia is currently in a neutral phase. Traders are anticipating Q4 inflation report which is due next week. Economists foresee a faster consumer inflation which could lead to a rate cut in the future.

On the USD side, US economic growth has been already affected by the longest government shutdown in the US history. The probability of recession in the US in the next 12 months is assessed at 20% like last month. The chance of recession in next two years is around 40%. According to Michael Morgan, the overheated economy in the US and unstable inflation rates alongside monetary policy tightening may undermine momentum in not-too-distant future. Recently US Existing Home Sales report was published with a decrease to 4.99M from the previous figure of 5.33M which was expected to be at 5.27M and HPI remained unchanged at 0.4% which was expected to decrease to 0.3%. Today US Unemployment Claims report is going to be published which is expected have a negative result of an increase to 219k from the previous figure of 213k, Flash Manufacturing PMI is expected to decrease to 53.5 from the previous figure of 53.8, Flash Services PMI is expected to decrease to 54.0 from the previous figure of 54.4, and CB Leading Index is expected to decrease to -0.1% from the previous value of 0.2%.

Meanwhile, USD is gaining momentum over AUD that is expected to be quite short-lived as AUD is propped up by decent economic data. The pair is expected to regain momentum consistently after a pullback along the way.

Now let us look at the technical view. The price is currently going lower towards 0.7000-50 support area quite impulsively. The price is expected to bounce off that area with a target towards 0.7200 again in the coming days. As the price remains above 0.70 with a daily close, the bullish bias is expected to continue.

SUPPORT: 0.6850, 0.7000-50

RESISTANCE: 0.7200, 0.7350

BIAS: BULLISH

MOMENTUM: VOLATILE

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The material has been provided by InstaForex Company - www.instaforex.com