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If the Australian dollar/USD breaks 0.6625, the bullish outlook is very strong
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Hello everyone, today XM Forex will bring you "[XM Forex Market Analysis]: If the Australian dollar/USD breaks above 0.6625, the bullish outlook is extremely strong." Hope it will be helpful to you! The original content is as follows:
On Tuesday (September 9), the Australian dollar/USD gradually rose. Although there were recurring during the period, the upward trend was relatively obvious. Prices accelerated in the afternoon, reaching a maximum of around 0.6619. The Australian dollar/USD exchange rate continues to rebound as market participants await the upcoming U.S. consumer inflation data and employment data. The dollar weakened before the correction of non-farm employment data, and U.S. job growth is expected to be significantly lowered in the year ended March.
U.S. employment and inflation data
The Australian dollar/USD exchange rate rose due to investors' reactions to the U.S. non-farm employment data (NFP) released last Friday, which showed that the number of new jobs in the United States in August was far lower than expected, with only 22,000 new jobs, lower than the market median expectation of 75,000.
The next report to focus on is "the revised value of the U.S. employment data for the 12-month period to March this year." Analysts expect that the Bureau of Labor Statistics correction data will show that 800,000 new jobs during this period are less than previously reported; some analysts believe that the correction difference may be close to 1 million.
If the correction is large, it will confirm that the strength of the US labor market is not as strong as previously expected. This situation may put pressure on the Federal Reserve, prompting it to initiate a rate cut next week.
The main risk at present is that the United States may fall into "stagflation" - a period of slowing economic growth but high inflation. Data scheduled for Wednesday is expected to show that the overall U.S. producer price index (PPI) will remain at 3.3%; excluding wavesThe core producer price index of projects with larger impacts will fall from 3.7% to 3.5%.
Another key factor affecting the Australian dollar/USD exchange rate will be the U.S. Consumer Price Index (CPI) released on Thursday, which is expected to rise from 2.7% in July to 2.9% in August, and the core consumer price index will rise from 3.1% to 3.2%.
So, while the Fed rate cut may help boost the U.S. economy, the move may also push up inflation levels in the long run.
RBA interest rate expectations
RBA's monetary policy easing pace is expected to be more cautious than the U.S. Federal Reserve System (Fed), while global economic growth remains strong. Australia's employment-related indicators show that the RBA should gradually implement loose monetary policies.
NAB Employment Sub-Index rose to an 11-month high of 5.2, xmspot.compared with 1.9 in July. The Westpac-Melbourne Institute’s unemployment expectations sub-index rose 4.6% in September, returning to the long-term average, indicating that the labour market is stable rather than improving.
Australia's employment data for August will be released on September 18, which will be a key factor affecting RBA interest rate expectations. The RBA has said the rate of decline in cash rates will depend largely on labor market conditions. Meanwhile, the RBA's cash rate futures market still expects interest rates to be cut by 50 basis points in the next 12 months.
Technical Analysis
Daily chart shows that the Australian dollar/USD exchange rate has rebounded in recent days, rising from the low of 0.6413 to the current above 0.6600. The exchange rate has now exceeded the important resistance level of 0.6565 - this position is also the neckline of the "double bottom pattern" formed by the low point of 0.6413.
The current Australian dollar/USD exchange rate continues to be higher than the 50-day average and the Ichimoku cloud chart. In addition, the relative strength index (RSI) and the index smooth similarity and similarity average (MACD) indicators both show a continuous upward trend.
AUD/USD is approaching the important resistance level of 0.6625 - this position is the highest volatility high this year and is also near the upper edge of the upward channel. The Australian dollar/USD is likely to test this resistance level and is expected to further rise to the resistance level of 0.6700.
However, UOBG's foreign exchange analyst Quek SerLeang and Peter Chia pointed out that strong momentum indicates that the Australian dollar may continue to rise, but given that negative divergence is forming, any upward trend may be difficult to hit 0.6625. In the long run, the rapid increase in upward action energy means that the Australian dollar may retest the year-on-year high of 0.6625.
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