Technical Analysis

AUD/USD Price Analysis – Aug 17, 2023

By LonghornFX Technical Analysis
Aug 17, 20233 min

Daily Price Outlook

The AUD/USD pair extended its eighth consecutive day of decline due to disappointing Australian employment data and overall market caution. This led to a 0.39% drop, bringing the pair to 0.6367. The weak jobs data has raised concerns about potential interest rate changes by the Reserve Bank of Australia (RBA) in their September 5 meeting. Moreover, concerns about China's economy and the hawkish stance of the Federal Open Market Committee (FOMC) are further pressuring AUD/USD prices.

Challenging Australian Job Market Data Impacts AUD/USD Pair

According to the recent info from the Australian Bureau of Statistics (ABS), Australia's job market struggled in July. The Unemployment Rate unexpectedly rose to 3.7%, exceeding both expectations and the previous month's 3.5%. Employment Change was also disappointing, with a loss of 14.6K jobs, in contrast to the anticipated 15K increase and June's 32.6K additions. Detailed data showed a decline of 24.2K Full-Time Employment roles, while Part-Time Employment grew by 9.6K. In response, the AUD/USD pair declined by 0.39% to trade at 0.6367, indicating concerns about future decisions by the Reserve Bank of Australia (RBA).

Hawkish FOMC Minutes and Positive US Data Weigh on AUD/USD

Furthermore, the recent hawkish tone from the Federal Open Market Committee (FOMC) minutes is also putting pressure on the AUD/USD prices. The minutes showed that even though some policymakers disagreed, most of them leaned towards dealing with the rising prices. This has added to the concerns affecting the AUD/USD.s

In the meantime, positive data from the US and higher returns on US Treasury bonds are also affecting the AUD/USD negatively. For example, the US Industrial Production surprised everyone by growing 1.0% in July, much more than expected. This, along with better Capacity Utilization, Building Permits, and Housing Starts numbers, has strengthened the US Dollar, making it tougher for the AUD/USD pair.

Multiple Concerns Impact AUD/USD Amid Global Developments

Apart from this, concerns are rising due to a drop in China's housing prices since June. This adds to worries about a potential bond market issue in China as a major real estate company, Country Garden, faces difficulties in paying its bond debts. Despite efforts from Chinese policymakers to reassure the economy, market response has been limited, raising concerns about China's economic health. This is putting pressure on the AUD/USD price.

Adding to the negative sentiment is the fact that Fitch Ratings, a global rating agency, lowered economic growth expectations for 10 developed countries, which is also contributing to the downward movement of the AUD/USD price.

AUD/USD Price Chart – Source: Tradingview
AUD/USD Price Chart – Source: Tradingview

AUD/USD - Technical analysis

Following the recent data from the Australian Bureau of Statistics, the nation's unemployment rate for July experienced an uptick, settling at 3.7%, a rise from June's 3.5%. This data revealed a growth in the number of unemployed individuals by 36,000. Additionally, the participation rate, representing the percentage of those aged 15 and older either employed or actively seeking employment, witnessed a slight dip of 0.1 percentage points, closing at 66.7%. This macroeconomic development has cast a shadow over the AUD/USD pair.

Professionally examining the trajectory of the AUD/USD pair, it has adeptly met our anticipated target at 0.6400. Initiating today's trading with a bearish undertone, the pair not only breached the 0.6400 level but also affirmed the dominating bearish trend, hinting at a potential movement towards our forthcoming bearish target set at 0.6310.

Reinforcing this downtrend, the 50-Day Exponential Moving Average (EMA50) lends its weight behind the envisaged bearish momentum. However, this sentiment will hold its validity contingent upon the pair's ability to maintain its position below the 0.6400 threshold.

For today's trading landscape, we foresee the pair oscillating within a range, demarcated by the 0.6310 support level and the 0.6420 resistance level.



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