Australian Dollar Analysis 01-07-2020

The Australian dollar fluctuated in a narrow range tilted to the upside during the Asian session 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 on Wednesday by the US economy, which includes the disclosure of the minutes of the Federal Open Market Committee meeting and in the wake of the governor’s testimony Federal Reserve Jerome Powell in front of Congress.

At exactly 03:43 am GMT, the Australian dollar pair rose against the US dollar by 0.05% to 0.6905 levels compared to the opening levels at 0.6903, after the pair achieved its highest level during the trading session at 0.6917, while the pair achieved its lowest at 0.6894.

On the Australian economy, we have followed the disclosure of the AIG manufacturing reading, which indicated a widening of 51.5 versus a contraction of 41.6 last May, and this came before we witnessed the disclosure of housing market data with the release of permits Construction, which indicated the decline of 16.4% compared to 2.1% last May, is worse than expectations, which indicated a decline of 7.0%.

On the other hand, investors are currently watching by the US economy to disclose preliminary data for the labor market with the release of the index of change in private sector jobs, which may reflect about 2,850 thousand added jobs compared to the loss of 2,760 thousand jobs in May, and this comes hours before the disclosure After tomorrow, Friday, the monthly report for jobs except agricultural and unemployment rates in addition to the hourly rate for the month of June.

This comes before we witness the disclosure of the final reading of the manufacturing PMI by Markit for the United States, which may reflect the stability of the contraction at a value of 49.6, little changed from the initial reading for the past month and against a contraction at 39.8 in May, before we witness the release of The construction spending index, which shows a 1.0% increase compared to a 2.9% decline in last April.

Up to the disclosure by the largest industrial country in the world of the reading of the Institute of Industrial Supply index, which may show contraction shrinkage to 49.5 compared to 43.1 in May, as the reading of the Institute of Industrial Supply measured in prices may indicate shrinkage of deflation to 43.8 compared to 40.8 , And we would like to point out, because the reading reading at a value of 50 or higher reflects an amplitude, while its reading under 50 indicates a contraction.

This comes before the Federal Reserve revealed the minutes of the Federal Open Market Committee meeting that took place on 9-10 June, through which it decided to fix interest on federal funds at zero levels between zero and 0.25%, which came in line with expectations at the time. And, with the disclosure also at the time of the expectations of the members of the Committee of the rates of growth, inflation and unemployment in addition to the future interest rates for the next three years.

We would like to point out, because the expectations of the members of the Federal Committee included at that time that short-term benchmark interest rates will remain at their zero levels until 2022 and that the American economy may shrink 6.5% during 2020 and that unemployment rates may reach 9.3% by the end of this year 2020, before It declined to 6.5% in 2021 and to 5.5% in 2022.

In another context, yesterday we followed the testimony of the Federal Reserve Governor Powell and the US Treasury Secretary Stephen Manuchin before the House Financial Services Committee, through which Powell stated that controlling the Corona virus is vital to the recovery of his country's economy and that a new stimulus is being adopted during July. He added that the Federal Committee intends to provide more information about the lending program and extend it by the end of this week.

This was with Powell touched on Tuesday that the Federal Reserve has concerns about China's commitment to the partial trade agreement reached by Washington with Beijing earlier this year, while expressing that it may abide by it, explaining that the United States lost its confidence in China because of the lack of transparency about the Corona virus, and came This is with Treasury Secretary Manuchin also emphasizing before Congress to work to expand stimulus during July.

It is noteworthy that the US Congress has allocated $ 3 trillion so far as financial stimulus that included direct financial distributions for families and plans to exempt from small business loans, while the Federal Reserve has implemented cash stimulus programs exceeding $ 1 trillion to support the credit market for families and companies, the last of which was the launch of the Federal Reserve last week for a program that provides a package Loans worth $ 600 billion for businesses that employ around 15,000 people or whose returns exceed $ 5 billion.

Technical analysis

The Australian dollar versus the US dollar pair shows an upward slope since yesterday, and we notice that the price is confined within a symmetrical triangle pattern whose features appear in the image, which provides signals on the price trend to resume the main bullish trend, especially after crossing the 0.6900 barrier, and the price needs to penetrate 0.6915 to activate the positive effect of the model Mentioned and then the rush to visit the 0.7064 level as the next major positive target.

From here, we expect a more bullish bias in the upcoming sessions, taking into consideration that breaking 0.6840 will stop the suggested rise and press the price to head towards 0.6700 directly.

The expected trading range for today is between 0.6840 support and 0.7000 resistance

Expected trend for today: bullish