Forex Market: AUD/USD trading outlook for February 22nd

Friday’s trade saw AUD/USD within the range of 0.7065-0.7164. The pair closed at 0.7150, shedding 0.10% on a daily basis. It has been the 7th drop in the past 15 trading days and also a second consecutive one. The daily low has been the lowest level since February 12th, when a low of 0.7062 was registered. In weekly terms, AUD/USD added 0.61% to its value in the current week. It has been the fourth gain in the past seven weeks and also a second consecutive one. AUD/USD has appreciated 0.93% so far during the current month, following a 2.68% slump in January.

On Monday (February 22nd) AUD/USD trading may be influenced by the following macroeconomic report listed below.

Fundamentals

United States

Manufacturing PMI by Markit – preliminary reading

Manufacturing activity in the United States probably was little changed in February, with the corresponding preliminary Purchasing Managers Index coming in at a reading of 52.5, according to market expectations. If so, this would be the highest reading since November 2015, when the PMI was reported at a final 52.8. In January the final seasonally adjusted PMI stood at 52.4, down from a preliminary 52.7.

According to Markits statement: ”Production volumes were reported to have increased at a solid pace in January, with the rate of expansion accelerating from December’s recent low. Reports from survey respondents cited improved spending patterns, in particular from domestic clients. Reflecting this, latest data pointed to a rebound in new business growth to its fastest for three months.”

”Payroll numbers expanded again at the start of the year, but the rate of job creation eased since December and was slightly slower than seen during 2015 as a whole. Some firms indicated that caution about the business outlook had held back staff hiring in January. Meanwhile, manufacturers also reported a slight drop in pre-production inventories and broadly unchanged stocks of finished goods at their plants. Growth of input buying also remained subdued, with the latest rise in purchasing activity the second-slowest recorded over the past two years.”

Values above the key level of 50.0 indicate optimism (expanding activity). In case the flash manufacturing PMI showed a better-than-anticipated performance, this would have a moderate bullish effect on the US dollar. The preliminary PMI reading by Markit Economics is due out at 14:45 GMT.

Correlation with other Majors

Taking into account the week ended on February 19th 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 USD/CHF (0.7356, or strong)
AUD/USD to NZD/USD (0.6412, or strong)
AUD/USD to USD/JPY (-0.1598, or weak)
AUD/USD to GBP/USD (-0.1837, or weak)
AUD/USD to EUR/USD (-0.5351, or strong)
AUD/USD to USD/CAD (-0.9622, or very strong)

1. During the examined period AUD/USD moved strongly in one and the same direction with USD/CHF and NZD/USD, while moving strongly in the opposite direction compared to EUR/USD.

2. AUD/USD moved almost equally in the opposite direction compared to USD/CAD during the week.

3. The correlation between AUD/USD and USD/JPY, AUD/USD and GBP/USD was insignificant during the period in question.

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 – 0.7126
R1 – 0.7188
R2 – 0.7225
R3 – 0.7287

S1 – 0.7089
S2 – 0.7027
S3 – 0.6990

By using the traditional method of calculation again, the weekly pivot levels for AUD/USD are presented as follows:

Central Pivot Point – 0.7134
R1 – 0.7204
R2 – 0.7257
R3 – 0.7327

S1 – 0.7081
S2 – 0.7011
S3 – 0.6958