AUDUSD analysis 01.09.2020

The Australian dollar fluctuated in a narrow, upward range during the Asian session, to witness its highest since the ninth of August of 2018 against the US dollar, following the economic developments and data that were followed on Monday by the Australian economy and amid looking forward to the decisions and directions of monetary policy makers at the Bank of Australia Reserve and on the cusp of economic developments and data expected today, Tuesday, by the US economy.

At 04:55 am GMT, the Australian dollar against the US dollar rose 0.38% to 0.7404 levels, compared to opening levels at 0.7376, after the pair achieved its highest level in two years at 0.7414, while the lowest level during the session's trading is at 0.7368.

We followed up on the Australian economy the release of the manufacturing index reading by the Australian Industrial Group (AIG), which showed a contraction at a value of 49.3 compared to an expansion of 53.5 in the previous reading for the month of July, and we would like to indicate that the release of the reading of 50 is the first highest. Reflects the expansion of the sector, while its issuance of less than 50 reflects the contraction of the sector.

This came before we witness the disclosure of housing market data, with the release of the building permits reading, which showed an increase of 12.0% compared to a decline of 4.2% in July, contrary to expectations that indicated a contraction of the decline to 0.9%, in conjunction with the current account reading showed the surplus widening to 17.7 billion Australian dollars compared to 9.0 billion Australian dollars in the first quarter, beating expectations that the surplus would widen to 13.0 billion Australian dollars.

This comes amid looking forward to the decisions and directions of monetary policy makers at the Central Bank of Australia and the Reserve Bank of Australia unveiled the interest rate statement amid expectations that short-term reference interest rates will be fixed at the lowest ever at 0.25%, hours before the unveiling on Wednesday of the output index reading The gross domestic product, which may reflect a widening contraction during the second quarter, and the entry of the Australian economy into a technical recession.

On the other hand, the markets are looking to unveil the final reading of the manufacturing PMI by Markit from the United States, which may reflect the stability of the expansion at a value of 53.6, unchanged from the initial reading for the past month and against 50.9 in July, before we witnessed it before. The US economy released the reading of the construction spending index, which showed an increase of 1.0% against a decline of 0.7% in June.

Up to the disclosure by the largest industrial country in the world of a reading of the Industrial Supply Institute index, which may show an expansion to 54.6 compared to 54.2 in July, while the reading of the same index measured by prices may indicate a decrease in the breadth to 52.0 compared to 52.3, before we witness the participation of a member of the Federal Reserve Open Market and Fed Deputy Governor Lyle Brainard in a hypothetical discussion on the economic outlook hosted by the Brookings Institution.

Technical analysis

The Australian dollar versus the US dollar managed to breach the bullish flag resistance mentioned in our recent report, to obtain a good positive incentive that pushes the price to surpass 0.7400 now, which supports the continuation of our bullish expectations effectively during the upcoming sessions, which targets 0.7485 as a next station.

Therefore, we await more incline during the upcoming sessions, keeping in mind that stability above 0.7325 is important to achieve the awaited targets.

The expected trading range for today is between 0.7350 support and 0.7480 resistance

The expected general trend for today: Bullish