Forex Market: AUD/USD trading outlook for May 16th

Friday’s trade saw AUD/USD within the range of 0.7254-0.7320. The pair closed at 0.7273, going down 0.72% on a daily basis. It has been the 11th drop in the past 22 trading days, a second consecutive one and also the sharpest one since May 9th. The daily low has been the lowest level since March 2nd, when a low of 0.7162 was registered. In weekly terms, AUD/USD lost 1.30% of its value during the current week. It has been the 10th drop in the past 19 weeks and also a fourth consecutive one. AUD/USD has gone down 4.34% so far during the current month, following a 0.72% slump in April.

On Monday (May 16th) AUD/USD trading may be influenced by the following macroeconomic reports as listed below.

Fundamentals

United States

New York Empire State Manufacturing Index

The New York Empire State Manufacturing Index probably slipped to a value of 7.00 in May, according to the median forecast by experts, from 9.56 in April. The latter has been the highest index reading since January 2015, when the gauge was reported at 9.95.

In April, the gauge of new orders rose to 11.14 from 9.57 in the preceding month, that of shipments went down to 11.14 from 13.88. The gauge of prices paid accelerated, that of prices received rebounded, while employment levels remained little changed. The six-month outlook continued to improve during the period, as future business conditions index surged for a third consecutive month, reaching a level of 29.4 (25.5 in March).

Readings above 0.00 are indicative of improving business conditions in the region. Lower-than-anticipated index values will usually have a moderate bearish effect on the US dollar. The Federal Reserve Bank of New York is expected to release the official reading at 12:30 GMT on Monday.

NAHB Housing Market Index

The National Association of Home Builders (NAHB) Housing Market Index probably rose to 59.0 in May, according to market expectations, from 58.0 in April. If so, this would be the 23rd consecutive month, when the gauge stood in the area above 50.0 and would also be the highest reading since January.

“Builder confidence has held firm at 58 for three consecutive months, showing that the single-family housing sector continues to recover at a slow but consistent pace,” NAHB chairman, Ed Brady, said in a reference to index performance in April, cited by Business Insider. “As we enter the spring home buying season, we should see the market move forward.”

The indicator is based on a monthly survey in regard to current home sales and expected sales in the coming six months. Values above the key level of 50.0 indicate that housing market conditions are good. Therefore, higher-than-projected readings would provide a moderate support to the US dollar. The official report is scheduled for release at 14:00 GMT on Monday.

Correlation with other Majors

Taking into account the business week ended on May 13th 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 GBP/USD (0.8609, or very strong)
AUD/USD to EUR/USD (0.8595, or very strong)
AUD/USD to NZD/USD (0.2082, or weak)
AUD/USD to USD/JPY (0.1906, or weak)
AUD/USD to USD/CHF (-0.2697, or weak)
AUD/USD to USD/CAD (-0.5740, or strong)

1. During the examined period AUD/USD moved almost equally in one and the same direction with EUR/USD and GBP/USD.

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

3. The correlation between AUD/USD and NZD/USD, AUD/USD and USD/JPY, AUD/USD and USD/CHF 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 – 0.7282
R1 – 0.7311
R2 – 0.7348
R3 – 0.7377

S1 – 0.7245
S2 – 0.7216
S3 – 0.7179

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

Central Pivot Point – 0.7310
R1 – 0.7365
R2 – 0.7458
R3 – 0.7513

S1 – 0.7217
S2 – 0.7162
S3 – 0.7069