Friday’s trade saw AUD/USD within the range of 0.6824-0.7005. The pair closed at 0.6869, falling 1.66% on a daily basis, or at the sharpest rate since August 24th 2015, when it lost 2.23%. It has been the 8th drop in the past 10 trading days. In addition, the daily low has been the lowest level since March 31st 2009, when a low of 0.6794 was registered. In weekly terms, AUD/USD lost 1.21% of its value during the current week, while extending the slump from the week ended on January 10th. The pair has depreciated 5.73% so far during the current month, following three consecutive months of gains.
On Monday (January 18th) AUD/USD trading may be influenced by the following macroeconomic reports as listed below.
Fundamentals
Australia
Inflation estimate
At 23:30 GMT on Sunday (January 17th) the University of Melbourne will release its estimate of inflation in Australian economy as of December. Annualized inflation estimate for November pointed to a rate of 1.8%, or the same as in October. If inflation rate rises, this adds to the case of an interest rate hike by the Reserve Bank of Australia (RBA), which usually has a bullish effect on the national currency. It is so, because assets, offering higher yields tend to attract more international investors, who will look to buy the domestic currency and respectively, its demand will be boosted.
New Motor Vehicle Sales
At 0:30 GMT on Monday the Australian Bureau of Statistics is scheduled to report on new motor vehicle sales in the country for December. New vehicle registrations rose 1.0% to 97 696 vehicles in November, mostly due to a surge in sales of passenger vehicles (+0.7% month-over-month) and sales of other vehicles (+6.6%). On the other hand, sales of sport utility vehicles shrank 1.6% in November compared to a month ago.
New vehicle 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 a greater confidence regarding their financial prospects. However, as new car sales account for a small portion of the Australian Gross Domestic Product, a potential increase would have a limited bullish effect on the Australian dollar.
M.L.Kings Birthday Holiday
Monday (January 18th) is Martin Luther Kings birthday holiday in the United States. Banks in the country are to remain closed.
Correlation with other Majors
Taking into account the week ended on January 14th and the daily closing levels of the currency pairs involved, we come to the following conclusions in regard to the strength of relationship:
AUD/USD to NZD/USD (0.9841, or very strong)
AUD/USD to GBP/USD (0.8628, or very strong)
AUD/USD to USD/JPY (0.4173, or moderate)
AUD/USD to USD/CHF (0.0649, or very weak)
AUD/USD to EUR/USD (-0.7749, or strong)
AUD/USD to USD/CAD (-0.9362, or very strong)
1. During the examined period AUD/USD moved almost equally in one and the same direction with GBP/USD and NZD/USD. The correlation between AUD/USD and NZD/USD was almost perfect.
2. AUD/USD moved almost equally in the opposite direction compared to USD/CAD during the week.
3. AUD/USD moved strongly in the opposite direction compared to EUR/USD during the period.
4. AUD/USD moved almost independently compared to USD/CHF during the week.
Daily and Weekly Pivot Levels
By employing the traditional calculation method, the Monday pivot levels for AUD/USD are presented as follows:
Central Pivot Point – 0.6899
R1 – 0.6975
R2 – 0.7080
R3 – 0.7156
S1 – 0.6794
S2 – 0.6718
S3 – 0.6613
By using the traditional method of calculation again, the weekly pivot levels for AUD/USD are presented as follows:
Central Pivot Point – 0.6914
R1 – 0.7005
R2 – 0.7140
R3 – 0.7231
S1 – 0.6779
S2 – 0.6688
S3 – 0.6553
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