The AUD/USD traded higher most of the session, getting its support from short-covering and profit-taking tied to technically oversold conditions. The
The AUD/USD traded higher most of the session, getting its support from short-covering and profit-taking tied to technically oversold conditions. The Forex pair finished at .7198, up 0.0016 or +0.22%.
On Tuesday, the Aussie broke sharply after Reserve Bank of Australia governor Glenn Stevens hinted that another rate cut to a fresh record low of 1.5 percent could be on the horizon. Earlier today, it was reported that Australian construction activity weakened sharply in the first quarter, extending on declines seen in 2015. Official data from the Australian Bureau of Statistics revealed a seasonally adjusted 2.6 percent slump in total construction work done in the three months to March 31.
Today’s price action suggests short-sellers are not interesting in pursuing that direction aggressively at current price levels. Although the fundamentals are bearish, this is not perceived as a value area for bearish traders. They would like to see the market at higher price levels in order to initiate fresh short positions. In addition, current short players are anxious to book profits after the prolonged break. This could lead to aggressive profit-taking and aggressive short-covering.
It may not be a stronger Australian Dollar that fuels a rally today, but a weaker U.S. Dollar. If the Greenback starts to lose upside momentum today then look for the Aussie to rally. If the U.S. Dollar posts another strong rally then the Australian Dollar should weaken, but don’t expect a volatile move to the downside.
Trader reaction to the bearish construction report earlier also suggests that the AUD/USD may have run out of aggressive sellers and is ripe for a counter-trend rally.
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.
Today’s economic releases:
Cur. | Event | Actual | Forecast | Previous |
USD | API Weekly Crude Oil Stock | -5.137M | -3.300M | -1.140M |
USD | API Weekly Cushing Crude Oil Stock | -0.189M | -0.950M | 0.508M |
NZD | Trade Balance (MoM) (Apr) | 292M | 60M | 117M |
NZD | Trade Balance (YoY) (Apr) | -3,660M | -3,940M | -3,380M |
AUD | Construction Work Done (QoQ) (Q1) | -2.6% | -1.5% | -3.6% |
EUR | GfK German Consumer Climate (Jun) | 9.7 | 9.7 | |
EUR | German Business Expectations (May) | 100.8 | 100.4 | |
EUR | German Current Assessment (May) | 113.2 | 113.2 | |
EUR | German Ifo Business Climate Index (May) | 106.8 | 106.6 | |
EUR | EU Finance Ministers Meeting | |||
USD | Goods Trade Balance (Apr) | -60.10B | -56.90B | |
USD | FOMC Member Harker Speaks | |||
USD | Services PMI (May) | 53.1 | 52.8 | |
CAD | Interest Rate Decision | 0.50% | 0.50% | |
USD | Crude Oil Inventories | -2.450M | 1.310M | |
USD | Cushing Crude Oil Inventories | 0.461M | ||
USD | FOMC Member Kashkari Speaks | |||
USD | FOMC Member Kaplan Speaks | |||
AUD | Private New Capital Expenditure (QoQ) (Q1) | -3.0% | 0.8% |
Upcoming Economic Events that you should be monitoring:
Thursday, May 26, 2016
Cur. | Event | Actual | Forecast | Previous |
GBP | BBA Mortgage Approvals | 44.8K | 45.1K | |
GBP | Business Investment (QoQ) (Q1) | 0.1% | -2.0% | |
GBP | GDP (YoY) (Q1) | 2.1% | 2.1% | |
GBP | GDP (QoQ) (Q1) | 0.4% | 0.4% | |
USD | FOMC Member Bullard Speaks | |||
USD | Core Durable Goods Orders (MoM) (Apr) | 0.3% | -0.2% | |
USD | Durable Goods Orders (MoM) (Apr) | 0.5% | 1.3% | |
USD | Initial Jobless Claims | 275K | 278K | |
AUD | RBA Assist Gov Debelle Speaks | |||
USD | Pending Home Sales (MoM) (Apr) | 0.6% | 1.4% | |
USD | FOMC Member Powell Speaks | |||
AUD | RBA Assist Gov Debelle Speaks | |||
JPY | National Core CPI (YoY) (Apr) | -0.4% | -0.3% | |
JPY | Tokyo Core CPI (YoY) (May) | -0.4% | -0.3% |
Government Bond Auctions
May 25 11:03 Sweden Sek 1bn 3.5% 2022 & Sek 3bn 1% 2026 bonds
May 25 11:05 Norway Holds bond auction
May 25 11:30 Germany Eur 1bn 2.5% Jul 2044 Bund
May 25 19:00 US Holds 5Yr Notes Auction, 2Yr FRN
May 26 11:10 Italy Announces details of bond auction
May 26 11:10 Italy Holds Zero-coupon/BTPei auction
May 26 17:20 Sweden Details of I/L auction on Jun 02
May 26 19:00 US Holds 7Yr Notes Auction
May 30 11:10 Italy Holds bond auction
Jun 01 10:30 Denmark Holds bond auction
Jun 01 11:30 Germany Eur 4bn Apr 2021 Bobl
Jun 01 11:30 UK 1.5% 2021 Gilt
Jun 01 17:20 Sweden Announces details of bond auction on Jun 08
Jun 02 10:30 Spain Holds bond auction
Jun 02 11:03 Sweden Holds I/L bond auction
Jun 02 11:50 France Holds bond auction
James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.