AUDUSD analysis 07.08.2020

The Australian dollar fluctuated in a narrow range that tends to decline during the Asian session, to witness from the top of it since the sixth of February 2019 against the US dollar after the economic developments and data that we have followed on the Australian economy and before the developments and economic data expected today, Friday, by the US economy, the largest economy in the world.

At 02:50 AM GMT, the Australian dollar against the US dollar fell 0.28% to 0.7215 levels compared to opening levels at 0.7235, after the pair achieved its lowest level during the session's trading at 0.7211, while the pair achieved its highest in a year and a half at 0.7243.

On the Australian economy, we followed up on the disclosure of the services index reading by the Australian Industrial Group (AIG), which reflected the contraction of 44.0, compared to 31.5 last June. This came before we witnessed the Reserve Bank of Australia unveiling the monetary policy statement for the meeting that took place. It was held on the fourth of August, during which it decided to keep interest rates at the lowest ever rate of 0.25% at the time.

The statement stated that the Australian Central Bank that the pace of recovery may be slower than initial expectations and that the gross domestic product may reflect a contraction of 6% in 2020, with an emphasis on not raising the official cash rate until progress is made with regard to employment and inflation, and that the Australian dollar, in general, is in line with Fundamentals, explaining not seeing the need to intervene in the foreign exchange market.

The statement also touched upon the fact that the Australian central bank still believes that negative interest is unlikely in Australia, with an emphasis on staying zero until progress is made in employment and inflation, and this came, before we witness the Australian Central Bank assistant governor's speech about the economy, Lucy Ellis, under the title "" Economic Outlook: Key Topics from the Monetary Policy Statement "at a webinar hosted by Australian trade economists.

On the other hand, investors are currently awaiting the US economy to unveil labor market data, with the release of the employment change index reading for the non-agricultural sectors, which may reflect 1,530,000 jobs added compared to 4,800,000 jobs added in June, while the average income index reading may indicate Per hour, the decline narrowed to 0.5% from 1.2%. This is with the unemployment rate reading showing a decline to 11.1% compared to 12.3% in June.

This comes before we witness the release of the final reading of the wholesale stocks index, which may confirm a 2.0% decline unchanged from the previous initial reading for the month of June and against a 1.2% decline in May, and in light of the market’s assessment of the division of US lawmakers over the virus relief package talks In light of concern about a second wave of Coronavirus outbreak and the threat of the White House to act on its own if it fails to reach an agreement with the Democrats.

Technical analysis

The Australian dollar versus the US dollar managed to overcome the 0.7200 barrier and settle above it, to support expectations of the continuation of the bullish trend in the intraday and short term, which targets 0.7290 as the next station.

The SMA 50 supports the suggested ascend, noting that a break of 0.7170 will pressure the price to test the pivotal support 0.7065 before any new attempt to rise.

The expected trading range for today is between 0.7150 support and 0.7290 resistance

The expected general trend for today: Bullish.