The Australian consumer is expected to further tighten the screws and reign in spending as investment lending as well as as owner-occupier loan value for May plunged. This is the latest sign of a slowing global economy which points towards a recession. The AUDUSD was able to extend its gains despite the economic data as forex traders continue to trade out of their long US Dollar positions after US Fed Chief Powell confirmed that that central bank is open to cut interest rates. How will this impact your forex investment? Subscribe to the PaxForex Daily Fundamental Analysis where you earn more pips per trade!
Here are the key factors to keep in mind today for Australian Dollar trades:
- Australian Consumer Inflation Expectations: Australian Consumer Inflation Expectations for July increased by 3.2% annualized. Forex traders can compare this to Australian Consumer Inflation Expectations for June which increased by 3.3% annualized.
- Australian Home Loans and Investment Lending: Australian Home Loans for May decreased by 0.1% monthly. Economists predicted a decrease of 1.0% monthly. Forex traders can compare this to Australian Home Loans for April which decreased by 0.9% monthly. Australian Investment Lending for May decreased by 1.7% monthly and the Owner-Occupier Loan Value decreased by 2.7% monthly. Economists predicted an increase of 0.5% and a flat reading of 0.0%. Forex traders can compare this to Australian Investment Lending for April which decreased by 2.2% monthly and to Owner-Occupier Loan Value which increased by 0.8% monthly.
After US Fed Chief Powell offered a dovish testimony before the House Financial Services Panel, the US Dollar came under selling pressure in what US President Donald Trump will call a path to his victory. He has long scolded Powell, first for raising interest rates as he is waging a trade war with China while slapping tariffs on allies and then for not cutting them. Powell will testify before the Senate Banking Committee today while five other Fed officials are scheduled for speeches. CPI data will be released and likely show a decrease in inflation and further bolster the call for interest rates to come down. Today’s fundamental analysis will look at the AUDUSD and where price action may be headed next.
Here are the key factors to keep in mind today for US Dollar trades:
- US CPI: The US CPI for June is predicted flat at 0.0% monthly and to increase by 1.6% annualized. Forex traders can compare this to the US CPI for May which increased by 0.1% monthly and by 1.8% annualized. The US Core CPI for June is predicted to increase by 0.2% monthly and by 2.0% annualized. Forex traders can compare this to the US Core CPI for May which increased by 0.1% monthly by 2.0% annualized.
- US Initial Jobless Claims and Continuing Claims: US Initial Jobless Claims for the week of July 6th are predicted at 221K and US Continuing Claims for the week of June 29th are predicted at 1,682K. Forex traders can compare this to US Initial Jobless Claims for the week of June 29th which were reported at 221K and to US Continuing Claims for the week of June 22nd which were reported at 1,686K.
- US Monthly Budget Statement: The US Monthly Budget Statement for June is predicted at -$20.0B. Forex traders can compare this to the US Monthly Budget Statement for May which was reported at -$207.8B.
Should price action for the AUDUSD remain inside the or breakout above the 0.6955 to 0.6995 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 0.6975
- Take Profit Zone: 0.7150 – 0.7210
- Stop Loss Level: 0.6910
Should price action for the AUDUSD breakdown below 0.6955 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 0.6935
- Take Profit Zone: 0.6830 – 0.6865
- Stop Loss Level: 0.6975
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