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Market View

A potential Setup at AUDUSD

Monday, April 22, 2019 12:43 PM GMT

A potentially rewarding bullish scenario could materialize at the AUDUSD pair, as it is about to test the low 1H Bollinger band.

The scenario should be considered busted if the pair reaches the 0.7080 level.

 

Strengths of Australian Economy:

  • China's latest macro releases confirm that the expansionary fiscal policy produces positive results.
  • Australian new budget, a few weeks before May's elections, is the first surplus budget of the decade and includes 75bn AUD for infrastructure, tax cuts for low and medium income families & energy assistance payments
  • improving macro readings: retail sales, current account, trade balance, inflation, inflation gauge, home loans, unemployment, M1, service PMI (crossed above 50), private capital expenditure, AIG manufacturing index, household consumption, consumer's sentiment, wage price index, building approvals, private sector credit

 

Weaknesses of Australian Economy:

  • GDP latest reading was unexpectedly lower and unemployment increased
  • Westpac, one of the top four Australian banks, is expecting two rate cuts, in August and November 2019. Moreover it lowered it's GDP expectations to 2.4%y/y from 2.7%. Recently, the 3-year government bond yield fell below RBA's main rate of 1.50%, an additional sign that a rate cut could happen within the next 3 to 8 months. Yet the communication of RBA, on 2nd of April, remained dovish.
  • deteriorating macro readings: GDP, unemployment, job advertisements, inflation expectations, manufacturing PMI,home sales, company operating profits, decreasing capital expenditure, business confidence

 

Disclaimer

The views expressed do not constitute investment or any other advice /recommendation /suggestion and are subject to change.Reliance upon information in this material is at the sole discretion of the reader.Opinions expressed in the report do not represent the opinion of Zulutrade and do not constitute an offer or invitation to anyone to invest or trade.
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