AUD/USD Fundamental Forecast – August 25, 2016

The Australian Dollar drifted modestly lower on Wednesday. Volume and volatility were down with most investors reluctant to take a major position ahead of a speech by the U.S. Federal Reserve Chair Janet Yellen on Friday.

The AUD/USD edged lower to .7593, down 0.0021 or -0.28%. Technical factors also played a role with traders noting the Forex pair was in a position to test the 50% level of its low on July 27 at .7420 and its August 10 high at .7755. Since the trend is up despite the loss of momentum since August 10, traders feel that the market is trying to find a balance point between the bulls and the bears, and what can be a better balance price than the mid-point of a major price range.

Barring an unexpected hawkish news from Yellen on Friday, I expect to see buyers return to defend the trend after establishing new support inside .7587 to .7548.

On the news front, the Australian Bureau of Statistics announced on Wednesday that total construction work done in Australia has fallen for the fifth consecutive quarter, dragged down by new work failing to fill the void left by the completion of big resources projects.

While traders didn’t immediately react to the weak construction figures, there are some who believe the report will have some impact on GDP figures, due to be released in two weeks. Some economists estimate that the fall in construction work would probably lop 0.5 percent off second quarter GDP, having already subtracted 0.1 percent from the first quarter.

As for today’s price action, we expected a more subdued market on Thursday with volatility picking up after Yellen’s speech at 1400 GMT on Friday.

FxEmpire provides in-depth analysis for each asset we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more up to the data analysis and information in our weekly reports, which covers the current week and are published by Sunday before the new week begins. Daily we share any new events, forecasts or analysis that affect the current day. To achieve a full accurate understanding it is important that you study all of our data and analysis as a whole.

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Thursday, August 25, 2016

Government Bond Auctions

Date/Time Country Type

Aug 24 10:03 Sweden Holds bond auction

Aug 24 10:30 Germany Eur 4bn 0% Oct 2021 Bobl

Aug 24 18:00 US Holds 2yr FRN auction & 5yr note auction

Aug 25 18:00 US Holds 7yr note auction

Aug 26 10:10 Italy Holds zero coupon