AUD analysis 05.03.2020

The Australian dollar fluctuated in a narrow range, which is sloping toward decline during the Asian session, to witness its bounce for the third session from the top since February 20 against the US dollar, following the developments and economic data that it had reported on the Australian economy and on the cusp of developments and economic data expected Thursday by the American economy, which These include the talk of FOMC member and Dallas Fed chief Robert Kaplan.

At 02:19 GMT, the Australian dollar pair fell against the US dollar by 0.20% to 0.6620 levels compared to the opening levels at 0.6627, after the pair achieved its lowest level during the trading session at 0.6607, while the pair achieved its highest at 0.6630.

We have followed on from the Australian economy the release of the trade balance reading, which indicated that the surplus has shrunk to A $ 5.21 billion from A $ 5.38 billion in December, contrary to expectations that the surplus will shrink to A $ 5.480 billion, and came hours after the disclosure yesterday, Wednesday From the fourth quarter growth data, which showed a slowdown in the pace of growth to 0.5% compared to 0.6% in the third quarter, beating expectations for a 0.4% growth.

In the same context, the annual reading of the GDP indicator showed that growth accelerated to 2.2% compared to 1.8% in the previous annual reading for the third quarter, also outperforming expectations that indicated growth acceleration to 2.0%. In another context, we followed last Tuesday the monetary policy makers The Australian central bank has cut interest rates by 25 basis points, the lowest ever, to 0.50%. Which came in line with expectations.

On the other hand, investors are currently awaiting by the US economy the disclosure of the final reading of the productivity index and the cost of one work, and it is expected that the productivity index reading will show stability of growth at 1.4% without a change from what it was in the initial reading for the fourth quarter and against a contraction of 0.2% in The previous reading for the third quarter, while the cost index reading may show an acceleration of growth to 1.5% compared to 1.4% in the initial reading and against a growth of 2.5% in the third quarter.

This comes in conjunction with the disclosure by the largest industrialized country in the world of a reading of the factory orders index, which may reflect a 0.2% decline compared to a rise of 1.8% in December, and with the release of the aid requests index for the past week at the end of last month, which may reflect a decrease by 4 thousand requests to 215 thousand requests compared to 219 thousand requests in the previous weekly reading.

This also comes in conjunction with the release of the last-day claims filing for the last week on February 22, which may reflect a rise of one thousand applications to 1,725 ​​thousand applications compared to 1,724 thousand requests in the previous weekly reading, up to the speech of a member of the Federal Committee and President of Dallas Bank Federal Reserve Robert Kaplan On trade wars, the global economic slowdown and monetary policy at the Chicago Council on World Affairs.

It is noteworthy that the Federal Reserve held a surprising meeting last Tuesday through which the members of the Federal Open Market Committee decided to reduce the interest on federal funds by 50 basis points to between 1.00% and 1.25% after fixing them in the previous two meetings of the Federal Reserve at between 1.50% and 1. 75%, and after reducing it three times by 25 basis points in previous meetings last year.

In the same vein, we also followed up on Tuesday, the press conference held by Federal Reserve Governor Jerome Powell after the decision to suddenly reduce markets to short-term benchmark interest rates, through which he noted that the decision came to support the American economy, while touching that over the past years wages increased and improved The labor market and that the committee has repeatedly stressed that the current monetary policy is appropriate.

Powell also noted at the time that several risks arose and the current situation became in a state of uncertainty, which made the Federal Committee see the existence of fundamental changes that prompted it to take a reaction, adding that over the course of the months and weeks ahead, the committee will work to monitor markets and developments and take appropriate decisions to support the economy He explained that the American economy is strong, but it is difficult to determine the extent of the negative effects of the spread of the Corona virus locally and globally.

Powell stressed during the press conference that the committee’s decision to cut interest at Tariq’s meeting for the first time since the global financial crisis that occurred more than a decade ago and by 50 basis points, which is rarely made by the Federal Reserve, is not a political decision but rather stems from a vision The Federal Committee for Current Events, and this came after US President Donald Trump repeatedly asked the Federal Reserve and Powell County to cut interest and expand stimulus.

Technical analysis

The Australian dollar pair is hovering against the US dollar around the resistance of the descending channel that appears in the picture, accompanied by the stochastic movement at the overbought areas, waiting for the price to stimulate the resumption of the main bearish trend, whose main target is at 0.6465.

Therefore, we will maintain our bearish forecasts for the upcoming period, noting that breaching 0.6620 then 0.6670 levels will stop the expected decline and lead the price to shift towards the intraday rise.

The expected trading range for today is between 0.6550 support and 0.6670 resistance.

Expected trend for today: bearish.