Forex Market: EUR/AUD trading forecast for Monday

Friday’s trade saw EUR/AUD within the range of 1.4279-1.4356. The pair closed at 1.4318, gaining 0.08% on a daily basis, while losing 0.73% for the whole week.

Fundamentals

Euro zone

Italian Balance of trade

The surplus on Italys trade balance probably contracted to EUR 1.5 billion in September, according to market expectations. Nations trade surplus rose 91.4% year-on-year to reach EUR 2.056 billion in August, as exports marked the first annual drop in nine months, while imports decreased the most in one year, due to lower energy purchases. Total exports fell at an annualized rate of 2.71% to EUR 24.07 billion in August, within which shipments of vehicles, excluding motor vehicles, dropped 14.0% and exports of agriculture, forestry and fishing products were 9.7% lower. Total imports decreased at a rate of 6.98% year-on-year to EUR 22 billion during the same month.

The trade balance, as an indicator, measures the difference in value between a country’s exported and imported goods during the reported period. It reflects the net export of goods, or one of the components to form the Gross Domestic Product. Generally, exports reflect how strong economic growth is, while imports indicate the strength of domestic demand. In case Italian trade surplus contracted more than anticipated, this might have a certain bearish effect on the single currency. The National Institute of Statistics (Istat) is to release the official trade data at 9:00 GMT on Monday.

Euro zone Balance of trade

The surplus on Euro areas trade balance probably expanded to EUR 10.0 billion in September, according to experts expectations, following a surplus figure of EUR 9.2 billion in the prior month. The latter has been the smallest surplus figure since January. In August 2013 the trade surplus was at the amount of EUR 7.3 billion. Total exports shrank at an annualized pace of 3% to EUR 140.5 billion in August, while total imports dropped 4% to reach EUR 131.3 billion.

The highest rates of increase in European Union exports were registered with China (11% during the period January-July compared to January-July 2013), South Korea (+10%) and the United States (+5%). As for EU28 imports, the largest increases were registered with South Korea (12% during the period January-July compared to the same period a year ago), Turkey (+7%), China (+6%) and Switzerland (+5%), according to the report by Eurostat released on October 16th.

Euro zones balance of trade produces regular surpluses mainly due to the high export of manufactured goods, such as machinery and vehicles. At the same time, the region is a net importer of energy and raw materials. Member states such as Germany, Italy, France and Netherlands play a key role in total trade.

In case the trade balance surplus expanded more than anticipated in September, this would certainly have a bullish impact on the euro. Eurostat is to publish the official trade data at 10:00 GMT.

Australia

At 0:30 GMT on Monday the Australian Bureau of Statistics is scheduled to report on new motor vehicle sales in the country for November. New vehicle registrations rose 0.8% in October compared to September, following 13 consecutive months of declines. A record high number of new vehicle registrations in Australia was recorded in September 2012 (98 241). New car sales, as an indicator, reflect how strong consumer confidence is. In case consumers are willing to make large-ticket purchases, such as new automobiles, this suggests they have greater confidence regarding their financial prospects. However, as new car sales account for a small portion of Australian Gross Domestic Product, a potential increase would have only a limited bullish impact on the national currency.

Pivot Points

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.4318. In case EUR/AUD manages to breach the first resistance level at 1.4356, it will probably continue up to test 1.4395. In case the second key resistance is broken, the pair will probably attempt to advance to 1.4433.

If EUR/AUD manages to breach the first key support at 1.4279, it will probably continue to slide and test 1.4241. With this second key support broken, the movement to the downside will probably continue to 1.4202.

The mid-Pivot levels for Monday are as follows: M1 – 1.4222, M2 – 1.4260, M3 – 1.4299, M4 – 1.4337, M5 – 1.4376, M6 – 1.4414.

In weekly terms, the central pivot point is at 1.4329. The three key resistance levels are as follows: R1 – 1.4440, R2 – 1.4562, R3 – 1.4673. The three key support levels are: S1 – 1.4207, S2 – 1.4096, S3 – 1.3974.