AUD analysis 06.03.2020

The Australian dollar fell during the Asian session to witness its bounce to the fourth session from the top since February 20, while it is still in the process of the first weekly gains in three weeks against the US dollar after the developments and economic data that it had reported on the Australian economy and in the wake of the members of the Federal Open Market Committee On the cusp of developments and economic data expected on Friday by the US economy, which includes the talk of another member of the Federal Open Market Committee.

At exactly 02:37 am GMT, the Australian dollar pair fell against the US dollar by 0.30% to 0.6594 levels compared to the opening levels at 0.6614, after the pair achieved its lowest level during the trading session at 0.6590, while the pair achieved its highest at 0.6624.

We have followed the Australian economy about the disclosure of the services index reading by the Australian Industrial Group (AIG), which reflected the widening of the contraction to 47.0 compared to 47.7 last January, and this came before we witnessed the release of the retail sales index, which indicated the widening decline To 0.7%, compared to 0.3% last December, beating expectations for 0.4% growth.

This came hours after last Wednesday's disclosure of 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, outperforming the forecasts for 0.4% growth, while the annual reading of the GDP indicator showed that the growth accelerated to 2.2% Compared to 1.8% in the third quarter, also outperforming expectations for accelerated growth to 2.0%.

Last Tuesday, we also followed the Reserve Bank of Australia’s resumption of interest rates during the current year, with a 25 basis point cut to the lowest level ever at 0.50%, which came in line with expectations, with the benefit from the Australian Central Bank’s interest rate statement preparing the Bank of Australia The reserve for further reduction later, after fixing it in the previous three meetings and following its reduction three times by 25 basis points last year.

On the other hand, we have just followed the talk of members of the Federal Open Market Committee, President of the Minneapolis Federal Reserve Bank Neil Kashkari, who participated in a panel discussion at the University of Minnesota in St. Paul, and the talk of New York Federal Reserve Chairman John Williams about monetary policy and economics at the services dinner. Finance for the New York Foreign Policy Association.

This came amid markets' aspiration to reveal the US labor market data for the past month, which may reflect the stability of unemployment rates at 3.6%, little changed from what they were in January, with a reading of the employment change index for sectors other than agriculture showed a slowdown in the pace of job creation To 175 thousand jobs compared to 225 thousand jobs in January, while reading the average hourly income index may show that the growth accelerated to 0.3% compared to 0.2%.

This comes in conjunction with the release of the trade balance reading, which may reflect the narrowing of the deficit to $ 46.3 billion compared to $ 48.9 billion in December, and before the disclosure of the final reading of the wholesale inventory index, which may explain the stability of the decline at 0.2%, up to the participation of Williams along with a member Another on the Federal Reserve is Boston Fed President Eric Rosengren at a panel discussion titled "Monetary Policy and Lower Zero" in New York.

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.

Technical analysis

The Australian dollar versus the US dollar maintains its stability within the descending channel that appears on the above chart, and presents negative trades in an attempt to resume the main downside trend, to keep the downside scenario based on the intraday and short term, which targets 0.6465 as a first station.

On the other hand, it should be noted that breaching 0.6610 then 0.6670 levels will stop the expected decline and push the price to start a bullish corrective wave.

The expected trading range for today is between 0.6520 support and 0.6650 resistance.

Expected trend for today: bearish.