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

Friday’s trade saw AUD/USD within the range of 0.7428-0.7508. The pair closed at 0.7493, rising 0.56% compared to Thursdays close. It has been the 13th gain in the past 22 trading days. The daily high has been the highest level since June 24th, when a high of 0.7683 was registered. In weekly terms, AUD/USD added 0.40% to its value during the current week. It has been the 14th gain in the past 26 weeks and also a fifth consecutive one. The major pair has gone up 0.56% so far during the current month, following a 3.01% advance in June.

On Monday (July 4th) AUD/USD trading may be influenced by the following macroeconomic reports as listed below.

Fundamentals

Australia

MI Inflation Gauge

At 1:00 GMT on Monday (July 4th) the University of Melbourne will release its estimate of inflation in Australian economy as of June. Annualized inflation estimate for May pointed to a rate of 1.0%, down from 1.5% in April. 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, the capital outflow will reduce demand for the domestic currency.

ANZ Job Advertisements

At 1:30 GMT the Australia and New Zealand Banking Group (ANZ) will publish data regarding the number of job advertisements in Australia in June. It encompasses advertisements in the major metropolitan newspapers and on the Internet sites. The corresponding index, based on a survey by the ANZ, increased at a monthly rate of 2.4% to 157 942 advertisements in May compared to April.

Internet job advertisements were 2.6% more in May, after a 0.7% decrease in the preceding month. At the same time, newspaper job advertisements fell 12.6% during the same period, following another 6.2% slump in April.

This indicator is used for projecting employment growth in Australia, as it reflects labor market conditions in the future. An increase in the number of jobs would have a limited bullish effect on the Australian dollar, while a decrease would have the opposite effect.

Building Approvals

The number of building approvals for new projects in construction probably decreased 3.3% in May, according to market consensus, following three successive months of increases. In April compared to March building permits, issued by the government, were 3.0% more. In annual terms, the number of permits rose 0.7% in April. Building approvals, as an indicator, provide information regarding future demand in the Australian housing market. A higher-than-anticipated drop would have a moderate bearish effect on the national currency. The Australian Bureau of Statistics is to publish the official data at 1:30 GMT.

US Independence Day

Monday marks the Independence Day federal holiday in the United States, which commemorates the adoption of the Declaration of Independence on July 4th 1776, declaring independence from the Kingdom of Great Britain (at present the United Kingdom). Markets in the country are to remain closed.

Correlation with other Majors

Taking into account the business week ended on July 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 NZD/USD (0.9914, or very strong)
AUD/USD to EUR/USD (0.9860, or very strong)
AUD/USD to USD/JPY (0.5573, or strong)
AUD/USD to GBP/USD (0.3819, or moderate)
AUD/USD to USD/CHF (-0.6033, or strong)
AUD/USD to USD/CAD (-0.9798, or very strong)

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

2. AUD/USD moved to a moderate extent in one and the same direction with GBP/USD during the week.

3. AUD/USD moved almost equally in one and the same direction with EUR/USD and NZD/USD during the period in question. This relationship has been the most pronounced between AUD/USD and NZD/USD, as the correlation between the two major pairs was almost perfect.

4. AUD/USD moved almost equally in the opposite direction compared to USD/CAD.

Daily, Weekly and Monthly Pivot Levels

By employing the traditional calculation method, the Monday pivot levels for AUD/USD are presented as follows:

Central Pivot Point – 0.7476
R1 – 0.7525
R2 – 0.7556
R3 – 0.7605

S1 – 0.7445
S2 – 0.7396
S3 – 0.7365

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

Central Pivot Point – 0.7439
R1 – 0.7562
R2 – 0.7632
R3 – 0.7755

S1 – 0.7369
S2 – 0.7246
S3 – 0.7176

In monthly terms, for AUD/USD we have the following pivots:

Central Pivot Point – 0.7433
R1 – 0.7667
R2 – 0.7883
R3 – 0.8117

S1 – 0.7217
S2 – 0.6983
S3 – 0.6767