AUDUSD moved downward as the U.S continued to received the positive signal from services sector.
Factors that cover on AUDUSD
Figures from the Australian Bureau of Statistics show the deficit in August fell by 5.19% or $111 million to seasonally adjusted $2.01 billion, compared with the reading in July. This positive statistics also stayed well above analysts’ forecasts of a $2.32 billion deficit.
The economists seemed to have a positive thought about this narrowing deficit or improved export performance since the July’s improvement in nominal export growth owes to non-rural goods, which rose $406 million, rather than the volatile non-monetary gold, which had brought a significant shrink in July’s reading. However, goods and services debits fell $101m to $28,866 million in seasonally adjusted terms. This poured a gloomy outlook for the domestic demand and the already below-targeted inflation.
Oil price is supported above $50/barrel by the planned output cut by OPEC and recent drop in U.S. crude inventories. Later Wednesday (5/10), U.S. Energy Information Administration (EIA) said crude stockpiles fell 3 million barrels last week to 499.74 million barrels. However, with the oil price at all-time high, investors anticipated that the U.S. shale drillers, who have spent much of the year cutting back production amid low prices, might start bringing back oil-rigs. The commodity’s current high price could help to lift up the commodity-reliant currency like the Australian dollar.
On the other hand, the dollar stood tall against other peers, including the Aussie, in early Asian trading session today (6/10) after the encouraging ADP nonfarm employment change. According to payroll processor Automatic Data Processing Inc and forecasting firm Moody’s Analytics, the U.S private firms added 154,000 workers to their ranks in September, lower than the expected advance of 173,000. Despite the lower-than-expected job growth, the market labor is considered to be stable with job openings at all-time highs and layoffs near all-time lows.
Moreover, this week’s news from the U.S market brought another positive signal for the traders and investors, with a massive comeback of the services sector, the key segment of economy. On Wednesday (5.10), the Institute for Supply Management published a report which said that the non-manufacturing index impressively crawled back to 57.1 in September, after falling to 51.4 in August. That was the highest level since October 2015.
Since the consumer expenditure on service sector—ranging from restaurants to real estate—makes up about two-thirds of all personal expenditures. The higher index means a higher consumer spending, which acted as a positive signto push up the inflation.
Other details of Wednesday’s reports were broadly positive with the new orders climbed to 60 from 51.4 and the Markit final services PMI rose to 52.3 from 51.9. The relatively strong figures may help assuage concerns the economy is slowing from last year’s moderate growth.
On Thursday (6/10), Bank of Japan Governor Haruhiko Kuroda implied his intention of extending the central bank’s quantitative easing program given that the there would be still more government bonds to purchase. He also claimed that the BOJ would conduct its operation of buying debt in the secondary market. This information has driven the investors away from the Japanese yen and forced them to find a safer shelter at other safe haven assets including the greenback.
The market is waiting for the all-important U.S. payrolls report on Friday, which could drive the investors’ money.
Fig. H4 AUDUSD Technical Chart
On H4, price is getting into a downtrend and moving between the level 50.0 and 38.2 of Fibonacci retracement. The bearish trend is reiterated with the ADX (14) heading up, along with DI- staying above DI+. The MA still casted a shadow over the price chart, which means the downtrend will last for longer time. Besides, the signal trend encourages a short position with the red arrow appearing since October 5th. The price is anticipated to find its new support at level 61.8 of Fibonacci retracement before rallying.
Fig. H1 AUDUSD Technical Chart
On H1, a gradual down channel is forming on the price action, combining with the moving average line lying over. The PFM signal trend indicator has encouraged shorts on this commodity since October 4th. The price may go down as low as 0.75731.
Analyses of Group Fiinvesting
Download PFMTools here and check out your trading skill level