Forex Market: AUD/USD trading outlook for July 18th

Friday’s trade (in GMT terms) saw AUD/USD within the range of 0.7555-0.7674. The pair closed at 0.7578, retreating 0.69% compared to Thursdays close. It has been the 9th drop in the past 22 trading days and also the steepest one since July 5th, when the major pair fell 1.02%. The daily high has been the highest level since May 3rd, when a high of 0.7720 was registered. In weekly terms, AUD/USD added 0.13% to its value during the current week. It has been the 16th gain in the past 28 weeks and also a seventh consecutive one. The major pair has gone up 1.72% so far during the current month, following a 3.01% advance in June.

On Monday (July 18th) AUD/USD trading may be influenced by the following macroeconomic report listed below.

Fundamentals

United States

NAHB Housing Market Index

The National Association of Home Builders (NAHB) Housing Market Index was probably unchanged at a reading of 60.0 in July, according to market expectations. If so, July would be the 25th consecutive month, when the gauge stood in the area above 50.0. In June, the sub-index of sales expectations advanced to 70.0 from 65.0 in the prior month, the gauge of buyer traffic rose to 47.0 from 44.0 in May, while the gauge of current sales conditions ticked up to 64.0 from 63.0 in May.

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.

Correlation with other Majors

Taking into account the business week ended on July 15th 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 (0.9029, or very strong)
AUD/USD to USD/JPY (0.8828, or very strong)
AUD/USD to EUR/USD (0.5885, or strong)
AUD/USD to NZD/USD (0.3310, or moderate)
AUD/USD to USD/CHF (0.2398, or weak)
AUD/USD to USD/CAD (-0.7274, or strong)

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

2. AUD/USD moved almost equally in one and the same direction with USD/JPY and GBP/USD during the week. This relationship has been the most pronounced between AUD/USD and GBP/USD.

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

Daily, Weekly and Monthly Pivot Levels

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

Central Pivot Point – 0.7602
R1 – 0.7650
R2 – 0.7721
R3 – 0.7769
R4 – 0.7816

S1 – 0.7531
S2 – 0.7483
S3 – 0.7412
S4 – 0.7340

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

Central Pivot Point – 0.7590
R1 – 0.7662
R2 – 0.7745
R3 – 0.7817
R4 – 0.7888

S1 – 0.7507
S2 – 0.7435
S3 – 0.7352
S4 – 0.7268

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
R4 – 0.8351

S1 – 0.7217
S2 – 0.6983
S3 – 0.6767
S4 – 0.6551