Forex Market: AUD/USD trading outlook for April 4th

Friday’s trade saw AUD/USD within the range of 0.7600-0.7700. The pair closed at 0.7681, edging up 0.16% on a daily basis. It has been the 13th gain in the past 22 trading days and also a fifth consecutive one. In weekly terms, AUD/USD added 2.30% to its value during the current week. It has been the 8th gain in the past 13 weeks and also the steepest one since the week ended on March 6th. AUD/USD advanced 7.38% in March, while extending the gain from a month ago.

On Monday (March 28th) AUD/USD trading may be influenced by the following macroeconomic reports listed below.

Fundamentals

Australia

MI Inflation Estimate

At 0:00 GMT on Monday (April 4th) the University of Melbourne will release its estimate of inflation in Australian economy as of March. Annualized inflation estimate for February pointed to a rate of 2.1%, decelerating from 2.3% in January. If inflation rate tends to slow down, this lowers the probability of an interest rate hike by the Reserve Bank of Australia (RBA), which would usually have a bearish effect on the national currency. It is so, because assets, offering lower yields tend to be unattractive to international investors, who will look to re-direct their capital to another state or region. As a result, demand for the domestic currency will be reduced.

Retail Sales

Seasonally adjusted retail sales in the country probably rose 0.4% in February from a month ago, according to the median forecast by analysts, following another 0.3% increase in January. Since it is a key indicator of consumption on a national scale, a higher-than-projected rate of increase in sales at retailers in Australia would have a strong bullish effect on the Aussie. The official report is to be released at 1:30 GMT.

Building Approvals

At 1:30 GMT Australias Bureau of Statistics is to report on the number of building approvals for new projects in construction during February. In January compared to December 2015 building permits, issued by the government, were 7.5% less, following a 9.2% increase in December compared to November. In annual terms, the number of permits dropped 15.5% in January, or a third consecutive month of decline and also the steepest one since April 2012. Building approvals, as an indicator, provide information regarding demand in Australia’s housing market. A higher than anticipated number would have a moderate bullish effect on the national currency.

United States

Factory Orders

Factory orders in the United States probably shrank 1.6% in February compared to January, according to the median estimate by experts, following a 1.6% expansion in the preceding month. Januarys increase has been the fastest since June 2015, when a revised up 2.2% gain was reported. Excluding the sector of transportation, factory orders went down 0.2% in January from a month ago. This indicator reflects the total value of new purchase orders, placed at manufacturers for durable and non-durable goods, and can provide insight into inflation and growth in the US sector of manufacturing. In case the general index of new orders dropped at a faster-than-anticipated rate, this would have a moderate bearish effect on the US dollar, as it implies future growth slowdown. The US Census Bureau will release the official data at 14:00 GMT.

Correlation with other Majors

Taking into account the week ended on April 1st 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 EUR/USD (0.9839, or very strong)
AUD/USD to NZD/USD (0.9821, or very strong)
AUD/USD to GBP/USD (0.2291, or weak)
AUD/USD to USD/JPY (-0.9188, or very strong)
AUD/USD to USD/CAD (-0.9548, or very strong)
AUD/USD to USD/CHF (-0.9566, or very strong)

1. During the examined period AUD/USD moved almost equally in one and the same direction with EUR/USD and NZD/USD. This relationship has been the most pronounced between AUD/USD and EUR/USD.

2. AUD/USD moved almost equally in the opposite direction compared to USD/JPY, USD/CAD and USD/CHF during the week. This relationship has been the most pronounced between AUD/USD and USD/CHF.

3. The correlation between AUD/USD and GBP/USD was insignificant.

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 – 0.7660
R1 – 0.7721
R2 – 0.7760
R3 – 0.7821

S1 – 0.7621
S2 – 0.7560
S3 – 0.7521

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

Central Pivot Point – 0.7632
R1 – 0.7772
R2 – 0.7862
R3 – 0.8002

S1 – 0.7542
S2 – 0.7402
S3 – 0.7312