AUDUSD remains under pressure in a bearish trend
Gary Christie October 28, 2020 7:38 PM
Australia CPI posts a gain however further easing may be needed.
The US Dollar was bullish against most of its major pairs on Wednesday with the exception of the JPY. On the US economic data front, the Mortgage Bankers Association's Mortgage Applications rose 1.7% for the week ending October 23rd, compared to -0.6% in the previous week. Finally, Wholesale Inventories fell 0.1% on month in the September preliminary reading (+0.4% expected), compared to a revised +0.3% in the August final reading.
On Thursday, Initial Jobless Claims for the week ending October 24th are expected to fall to 770K, from 787K in the week before. Continuing Claims for the week ending October 17th are expected to decline to 7,700K, from 8,373K in the prior week. GDP for the third quarter advanced reading is expected to soar to +32.0% on quarter, from -31.4% in the second quarter third reading. Finally, Pending Home Sales for September are expected to rise 3.0% on month, compared to +8.8% in August.
The Euro was mixed against all of its major pairs. In Europe, France's INSEE has released October Consumer Confidence Index at 94 (vs 93 expected).
The Australian dollar fell the most against all of its major pairs after declining over 1% or 73 pips in Wednesday's trading. Australia's headline CPI rose by 1.6% in the third quarter which was slightly above the 1.5 estimate compared to a decline of 1.9% in the second quarter. The increase was driven by rebounds in childcare, automotive fuel and child education costs. Even with a gain in the CPI, Bloomberg economists believe the gain provides no reason for the RBA to cut back on further easing at its November board meeting.
Looking at the daily chart of the AUD/USD the pair pulled back from a declining trendline that is acting as resistance as the bearish trend channel remains in play after the 20-day moving average crossed below the 50-day moving average back on the 14th of Oct. We anticipate further pressure down to test 0.700 support and ultimately 0.692 in extension. A break above 0.725 would be a strong bullish signal and a possible sign of a trend reversal to the upside.
Source: GAIN Capital, TradingView
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.