Bullish View
Buy the AUD/USD and set a take-profit at 0.7428.
Add a stop-loss at 0.7350.
Timeline: 2 days.
Bearish View
Set a sell-stop at 0.7285 and a take-profit at 0.7200.
Add a stop-loss at 0.7350.
The AUD/USD price retreated after the US published weak consumer confidence data on Wednesday. The pair also reacted relatively mildly to the latest Australian GDP and Manufacturing PMI data. It is trading at 0.7312, which was slightly below the intraday high of 0.7340.
Australian GDP Data
The Australian economy bounced back in the second quarter as more businesses continued to reopen. Data published by the Australian Bureau of Statistics (ABS) showed that the country’s economy expanded by 9.6% in Q2 after rising by 1.1% in the previous quarter.
The economy expanded by 0.7% on a quarter-over-quarter basis. The bureau attributed this growth to a 3.2% increase in capital expenditure and 1.2% increase in final consumption. Consumer consumption is the biggest constituent of the Australian GDP.
The AUD/USD reacted mildly to the GDP number because the economy has changed significantly in the past few months. For one, the country has recorded more COVID cases, pushing the government to announce lockdowns in key states like New South Wales and Victoria.
Therefore, there is a possibility that the economy will retreat in the third quarter. In fact, data published by the Australian Industry Group (AIG) and Markit showed that manufacturing activity retreated slightly in August. The AIG number declined from 60.8 to 51.6 while the one from Markit fell from 56.9 to 52. The same trend happened in China, Australia’s biggest trading partner, where the PMI declined from 50.3 to 49.2.
Looking ahead, the next key catalyst for the AUD/USD will be the latest Markit and the Institute of Supply Management (ISM) manufacturing data from the US. The PMI is expected to drop slightly as the cost of doing business rose. Also, ADP will publish the latest estimate of private payrolls data. This number will come two days before the official NFP data.
AUD/USD Forecast
The three-hour chart has had a strong recovery in the past few days. It has risen by almost 3% from its lowest level on August 20th. The pair has also moved slightly above the 25-day and 15-day exponential moving averages (EMA). Additionally, the pair is forming an inverted head and shoulders pattern and is along the previous R1 of the standard pivot point.
Therefore, the pair will likely keep rising as bulls target the key resistance at 0.7427. This is an important price since it is along the highest point on August 4.
