AUD Analysis 16.09.2019

The Australian dollar fluctuated in a narrow, bearish range during the Asian session against the US dollar amid the lack of economic data earlier this week by the Australian economy and on the eve of developments and economic data expected on Monday by the US economy, the world's largest economy.

At 02:35 AM GMT, the AUDUSD fell 0.15% to 0.6869 levels, compared to the opening levels of 0.6880, after the pair reached its lowest level during the session at 0.6857, while achieving the highest at 0.6883.

Markets are looking ahead Tuesday for the Reserve Bank of Australia to release the minutes of the Reserve Bank of Australia's September 3 meeting, during which RBA monetary policy makers agreed to hold short-term interest rates at an all-time low for the second consecutive meeting at 1.00. Which was expected by market analysts at the time.

It is noteworthy that the minutes of the previous RBA meeting mentioned that it is reasonable to expect an "extended period" of low interest rates, while stating that the RBA monetary policy makers reviewed during the previous meeting the experience of developed countries with unconventional monetary policy. The measures are likely to be more effective than individual steps.

The monetary policy statement of the Reserve Bank of Australia's previous meeting earlier last month also indicated that policymakers believed core inflation could reach 1.5% by December, before growth accelerates to 1.75% by the end of next year. 2% by the middle and end of 2021, amid the signal at the time that the near-term risks to economic growth are more negative.

Earlier last month, Reserve Bank of Australia Governor Philip Lowe testified before the House of Representatives in Canberra that the Reserve Bank of Australia was ready to expand interest rate cuts if needed to support the labor market and stimulate inflation. Interest rate twice in quick succession, we thought it appropriate to wait and assess the consequences of monetary easing.

RBA Governor Lowe also said on August 9 that it is reasonable to expect a prolonged period of low interest rates in Australia, explaining at the time that it is unlikely but likely to move to a minimum of zero interest rates. He hopes that this can be avoided, although he is prepared to use exceptional monetary policy if justified.

On the other hand, investors are awaiting the US economy, the largest industrial countries in the world, the release of the New York manufacturing index, which may show the contraction widened to 4.1 from 4.8 in August, and comes hours before the release of the industrial production index tomorrow, which may show a rise 0.2% versus a 0.2% decline in July, while the Energy Exploit Rate reading may reflect an acceleration of growth to 77.6% versus 77.5%.

Markets are also looking ahead to the FOMC meeting on Tuesday and Wednesday in Washington, which is expected to cut the federal funds rate by 25 basis points for the second consecutive meeting to between 1.75% and 2.00%. On the expectations of members of the Committee on growth rates, inflation and unemployment in addition to the future of interest rates for the next three years.

Federal Reserve Governor Jerome Powell is due to hold a press conference next Wednesday, half an hour after the FOMC meeting, which has been widely criticized by US President Donald Trump for demanding the Fed. And Powell's governorate cut interest rates "to zero or less."

Technical Analysis

AUDUSD continues to fluctuate at the resistance of the descending channel, and the price remains stuck between the trend keys of 0.6830 support and 0.6885 resistance, where the price needs to breach one of these levels to determine its next destination more precisely, thus maintaining our neutral stance so far.

The breach of the mentioned resistance will push the pair to achieve more positive targets reaching 0.7020, while breaking the support will put the price under negative pressure to resume trading inside the main descending channel, then heading towards 0.6670 initially.

Expected trading range for today is between 0.6830 support and 0.6920 resistance

Expected trend for today: Neutral