Bearish View
Sell the AUD/USD pair and set a take-profit at 0.7300.
Add a stop-loss at 0.7500.
Timeline: 2 days.
Bullish View
Set a buy-stop at 0.7435 and a take-profit at 0.7550.
Add a stop-loss at 0.7350.
The AUD/USD tilted upwards on Monday morning as investors reflected on the relatively strong jobs numbers from the United States and trade numbers from China. The pair is trading at 0.7400, which is above last week’s low of 0.7358.
US Jobs Numbers and China Trade
The US published relatively strong economic numbers on Friday, signalling that the economy is doing well. According to the Bureau of Labor Statistics (BLS), the economy added more than 531k in October. This was better than the median estimate of 400k. It was also better than the 332k that were created in September.
In the same period, the country’s unemployment rate declined from 4.8% in September to 4.6% in October. This was a better reading than what analysts were expecting. At the same time, wages rose by about 4.9% in October.
These numbers were important because they came two days after the Federal Reserve delivered a relatively hawkish interest rate decision. The bank decided to leave interest rates unchanged between 0.0% and 0.25%. It also started to taper its asset purchases by about $15 billion. Therefore, the strong jobs numbers mean that the Fed will keep tightening its monetary policy.
Meanwhile, China published relatively strong trade numbers on Sunday. The data showed that the country’s exports increased by 27.1% in October even as the supply challenges continued. Its imports also increased from 17.6% to 20.6%. These numbers are important because of the close relationship that exists between China and Australia.
The next key numbers that will move the AUD/USD pair this week will be the US consumer inflation data and Australian employment. Economists expect the data will show that the US Consumer Price Index rose from 5.4% in September to 5.8% in October. In Australia, the unemployment rate is expected to have increased to 4.7%.
AUD/USD Forecast
The four-hour chart shows that the AUD/USD pair declined to a low of 0.7357 last week. This was the lowest level since October 14 and was also about 2.62% below the highest level this year. The pair pared back some of these losses on Friday after the strong American inflation data. It is slightly below the 25-day and 50-day moving averages and is slightly above the 38.2% Fibonacci retracement level. Therefore, the pair will likely resume the bearish trend as bears target the next key support level at 0.7300.
