AUD/USD Daily: Back above Ichimoku’s Testing 23% Fibonacci
Forex Trading idea: Wait for a confirmation above 0.8041
Hot Economic Movers:
China
Mr. Aussie has been affected by Australia’s trading buddy, China. China’s central bank dropped a bombshell on the markets by announcing an interest rate cut over the weekend. Wednesday morning during the Asian session Chinese markets went higher despite retail sales and industrial production missing expectations.
Seems like investors thing it’s all good news! Whether it’s really about investment reform or actual policy easing, investors seemed to take the Chinese interest rate cut positively. Mr. Aussie (AKA Aussie dollar) seemed hopeful that China’s economic stimulus would eventually translate to stronger demand for the Land Down Under’s raw material commodity exports.
Employment
Australia’s employment change and jobless rate readings came in the red last week but on the bright side ANZ job advertisements report showed a 2.3% rebound for April after falling by 1.3% in March. This leading indicator of hiring conditions suggests that there still might be enough job opportunities to spark a recovery in employment later on.
Consumer Spending
Since employment conditions haven’t exactly been favorable, it’s no surprise that consumer spending has also gone down. After showing a 0.7% increase in March, retail sales ticked up 0.3% for April, lower than the projected 0.4% gain.
In addition, consumer sentiment has deteriorated, with the Westpac index printing a 1.2% decline for March followed by a 3.2% drop in April. As it turns out, Australians are getting increasingly worried about financial conditions, which might lead them to be more tight-fisted with their hard-earned cash.
Aussie Rate Cut
After Australia cut rate 0.25% earlier last week, some forex traders still think that the RBA is likely to cyt interest rates again and send Mr. Aussie down low.
Watch my video explaining how a rate cut could affect Mr. Aussie.
Technical Analysis: The Australian dollar dancing against US dollar (AUD/USD) is back above the Ichimoku cloud and currently testing the key resistance level at 23% Fibonacci. Quite a bit of a range but a break above this level could potentially mean a reversal for the pair and we could see more upmoves coming up. The RSI is heading up towards the overbought zone.
Alternative Scenario: Above 0.79 look for drops targeting 0.76 and 0.73 in extension.
Where to set your stops and limits:
| Support Levels | Turning Point | Resistance Levels |
|---|---|---|
| 0.76 | 0.79 | 0.8041 |
| 0.73 | 0.7733 | 0.8319 |
