AUD/USD Price Tracks Descending Channel Forward AU Employment Report

Australian Greenback Speaking Factors

AUD/USD slips to a recent yearly low (0.7238) because it extends the decline following the Reserve Financial institution of Australia (RBA) Minutes, and the change charge might proceed to present again the advance from the November 2020 low (0.6991) because it trades inside a downward trending channel.

AUD/USD Price Tracks Descending Channel Forward AU Employment Report

AUD/USD stays below stress because the RBA Minutes warns that “the present virus outbreaks and lockdowns had interrupted the restoration,” and the change charge might face an additional decline forward of the Kansas Metropolis Fed Financial Symposium scheduled for August 26 – 28 amid the diverging paths for financial coverage.

It appears as if the RBA is on a preset course because the central financial institution plans to “proceed with the bond buy program at a diminished charge of $four billon per week, as soon as the second $100 billion of purchases is full in September 2021,” and Governor Philip Lowe and Co. seem like in no rush to modify gears because the “Board can be ready to behave in response to additional dangerous information on the well being entrance ought to that result in a extra vital setback for the financial restoration.”

Consequently, the replace to Australia’s Employment report might maintain the RBA on the sidelines at its subsequent rate of interest determination on September 7 because the economic system is predicted to shed 46.2K jobs in July, and the renewed lockdowns throughout Asia/Pacific might proceed to pull on AUD/USD as a rising variety of Federal Reserve officers present a better willingness to taper the quantitative easing (QE) program.

In flip, the decline from the February excessive (0.8007) signifies a change within the broader development as AUD/USD sits beneath the 200-Day SMA (0.7605) for the primary time in over a yr, however an additional depreciation within the change charge might gas the lean in retail sentiment just like the conduct seen earlier this yr.

The IG Consumer Sentiment report reveals 66.96% of merchants are presently net-long AUD/USD, with the ratio of merchants lengthy to brief standing at 2.03 to 1.

The variety of merchants net-long is 6.10% increased than yesterday and 12.85% increased from final week, whereas the variety of merchants net-short is 2.58% decrease than yesterday and 17.27% decrease from final week. The rise in net-long curiosity has fueled the crowding conduct as 64.08% of merchants had been net-long AUD/USD final week, whereas the decline in net-short place might be a operate of profit-taking conduct because the change charge slips to a recent yearly low (0.7238).

With that stated, AUD/USD might proceed to present again the advance from the November 2020 low (0.6991) because it trades inside a downward trending channel, and the replace to Australia’s Employment report might maintain the change charge below stress as job development is predicted to contract for the second time this yr.

AUD/USD Price Day by day Chart

Supply: Buying and selling View

• There seems to be a shift within the broader development as AUD/USD sits beneath the 200-Day SMA (0.7605) for the primary time in over a yr, with the decline within the change charge pushing the Relative Energy Index (RSI) into oversold territory for the primary time since March 2020.
• On the similar time, the 50-Day SMA (0.7451) has developed a unfavourable slope as AUD/USD trades inside a descending channel, with the break/shut beneath the 0.7290 (23.6% growth) area bringing the Fibonacci overlap round 0.7189 (61.8% retracement) to 0.7210 (78.6% retracement) on the radar.
• Subsequent space of curiosity is available in round 0.7130 (61.8% retracement) to 0.7140 (23.6% growth) adopted by the 0.7060 (61.8% growth) to 0.7090 (78.6% retracement) area.

— Written by David Track, Forex Strategist

Observe me on Twitter at @DavidJSong