Bullish View
Set a buy-stop at 0.7412 and a take-profit at 0.7500.
Add a stop-loss at 0.7350.
Timeline: 1-2 days.
Bearish View
Set a sell-stop at 0.7380 and add a take-profit at 0.7300.
Add a stop-loss at 0.7450.
The AUD/USD pair tilted upwards after the latest Australian retail sales and Services PMI numbers. The pair rose to 0.7405, which was about 1.57% higher than the lowest level in July.
Australia Lockdown Impacts
The impact of the ongoing lockdowns in some parts of Australia became clear today. Data published by the country’s statistics agency showed that retail sales rose by 0.8% in the second quarter after declining by 0.5% in Q1.
This increase was lower than estimated. It happened because of the lockdowns in New South Wales in June. As a result, retail sales declined by 1.8% in June. The report said that orders at most cafes and restaurants had the biggest dip in August while stay-at-home orders rose. Department stores also saw more weakness in the second quarter.
Further data showed how bad the country was affected. According to Markit, the country’s Services PMI declined from 56.8 in June to 44.2 in July. Similarly, the Construction PMI fell from 55.5 to 48.7 in July. A PMI reading of 50 and below is a sign that an industry is declining. Therefore, the situation will likely continue worsening as the country continues its lockdowns.
These numbers came a day after the Reserve Bank of Australia (RBA) delivered its interest rate decison. The bank decided to leave interest rates unchanged at 0.10%, where they have been in almost 10 months. It will also continue with its asset purchases in August and then reduce the size in September. The bank will continue with its yield curve control program.
Looking ahead, the top catalysts for the AUD/USD will be the US jobs numbers. On Wednesday, ADP will publish its estimates for private payrolls. These numbers will be followed by the US initial jobless claims on Thursday and non-farm payrolls on Friday.
AUD/USD Technical Outlook
The 4H chart shows that the AUD/USD has been on a slow upward trend recently. Along the way, the pair has formed an ascending triangle pattern whose resistance is at 0.7412. It has also moved slightly above the 25-day and 50-day exponential moving averages (EMA), which is another bullish thing. Therefore, the pair will likely have a bullish breakout in the near term. This price action will be validated if the price manages to move above the resistance at 0.7412. If this happens, the next level to watch will be at 0.7500.
