Bullish view
- Buy the AUD/USD pair and set a take-profit at 0.6800.
- Add a stop-loss at 0.6550.
- Timeline: 1-2 days.
Bearish view
- Sell the AUD/USD pair and set a take-profit at 0.6550.
- Add a stop-loss at 0.6800.
The AUD/USD exchange rate was flat on Monday as traders waited for important macro data from the US and Australia. It was trading at 0.6695, a few pips below last week's high of 0.6725.
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The pair wavered as market participants reacted mildly to the weekend attack in Venezuela where the US took Nicholas Maduro and his wife. In a statement, Donald Trump said that the US will take control of the country’s government, with American companies focusing on boosting oil production.
The AUD/USD pair will next react to the upcoming US manufacturing PMI numbers, which will provide more information about the state of the manufacturing sector. Economists expect the reports by ISM and S&P Global will show that the sector continued contracting, with the ISM coming in at 48.3.
The Australian PMI report, which will come out on Tuesday, is expected to show that the services PMI came in at 51, down from the 52.8 in November. The composite PMI is expected to come in at 52.6.
Most importantly, the Australian Bureau of Statistics (ABS) will publish the November inflation report on Wednesday, with analysts expecting the headline CPI to come in at 3.7%. The recent Australian inflation numbers explain why analysts expect the Reserve Bank of Australia (RBA) may decide to hike rates later this year.
Meanwhile, the Bureau of Labor Statistics (BLS) and ADP will publish the latest US jobs report. Economists expect the data to show that the private sector created 50k jobs in December after shedding 32k in the previous month.
The BLS report is expected to reveal that the economy created 55k jobs as the unemployment rate improved to 4.5% from the previous 4.6%.
AUD/USD Technical Analysis
The AUD/USD exchange rate has rebounded in the past few weeks as the odds of a divergence between the Federal Reserve and the Reserve Bank of Australia rose. It rose from a low of 0.6420 in November to the current 0.6700.
The pair has continued rising above the 50-day Exponential Moving Average (EMA). It has formed what looks like a cup-and-handle pattern, a common bullish continuation sign.
It has moved above the Supertrend indicator, meaning that the pair will continue rising, with the next key resistance level to watch being at 0.6800. A move below the support at 0.6600 will invalidate the bullish outlook.
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