AUD analysis 17.03.2020

The Australian dollar continues to move within a narrow range tilted back down during the Asian session to witness to continue to decline for the seventh consecutive session against the US dollar on the cusp of developments and economic data expected on Tuesday by the US economy, the largest economy in the world amid growing fears of the spread of the global epidemic of the Corona virus.

At exactly 04:59 AM GMT, the Australian dollar pair fell against the US dollar to 0.6080 levels compared to the opening levels at 0.6104 after the pair achieved its highest level during the trading session at 0.6148, while achieving the lowest at 0.6064.

Investors are currently awaiting the US economy to reveal the retail sales reading, which represents about half of consumer spending, which represents more than two thirds of the gross domestic product of the United States, which may reflect a slowdown in the pace of growth to 0.2% compared to 0.3% in the previous reading in January, A substantial reading of the same indicator may also show a slowdown in the pace of growth to 0.1% compared to 0.3% in January.

This comes before we witness the disclosure of the industrial sector data for the largest industrialized country in the world with the release of the industrial production index, which may reflect an increase of 0.4% compared to a decline of 0.3% in January, while the reading of the energy utilization index may show an acceleration of the growth rate to 77.1% Against 76.8% in January, and also before the release of the wholesale inventories reading, which may explain a decline of 0.1% compared to a rise of 0.1% in December.

Up to the disclosure of labor market data with the release of a job reading and job turnover reading that may reflect a decrease to 6.40 million compared to 6.42 million in December, in conjunction with the disclosure of housing market data with the release of the housing index reading by the National Association of Builders Houses that may reflect stability at $ 74 in February.

This comes hours after the Federal Reserve’s surprising meeting last Sunday, which is the second surprising meeting in less than two weeks, after the previous sudden meeting on the third of this month in which the Federal Reserve’s monetary policy makers decided to return to the short-term benchmark interest rates. Zero levels reached in the wake of the worsening global financial crisis more than a decade ago.

The members of the Federal Open Market Committee reduced the interest on federal funds by 100 basis points to between zero levels and 0.25%, which they remained from 2008 until the meeting of 27-28 October 2015, after reducing them in the previous emergency meeting by 50 points. The basis is between 1.00% and 1.25%, and this comes in the wake of the committee members cutting interest three times by 25 basis points in previous meetings last year.

The Federal Reserve's monetary policy statement stated that the decision to reduce will be effective from Monday March 16, and that the Federal Open Market Committee will repurchase treasury bonds with at least $ 500 billion per month and mortgage-backed securities at $ 200 billion per month At least, these purchases should be made at the appropriate speed to support the smooth performance of the stock market, treasury and mortgage agency.

This comes, hours after the sudden meeting of the Federal Reserve last Sunday, during which members of the Federal Open Market Committee decided to cut interest rates by 100 basis points to between zero levels and 0.25%, after less than two weeks from another sudden meeting The Federal Reserve was able to reduce interest by 50 basis points at the time, and quantitative easing plans and bond purchases of $ 700 billion a month were announced.

Technical analysis

The Australian dollar versus the US dollar made noticeable negative trades yesterday after maintaining stability below 0.6235, which keeps the downside scenario valid and active in the short and medium term, awaiting further decline towards the trend towards 0.6000 which represents our next main station.

On the other hand, it should be noted that breaching 0.6235 will push the price to start a new bullish wave targeting 0.6320 then 0.6460 initially.

The expected trading range for today is between 0.6020 support and 0.6200 resistance.

Expected trend for today: bearish.