AUD/USD – Technical Analysis for Forex Trading.
Australia – Home Loans
Yesterday, at GMT 2:30 a.m., the Australian Bureau of Statistics released the month-over-month home loans figure, which measures the changes in the number of new loans approved for owner-occupied homes.
Since most home purchases are financed by banks, the new home loan figure acts as an excellent gauge of how many qualified buyers are ready to take out home loans. Therefore, economists and Forex traders consider the changes in the new home loan figure to be a leading indicator of the overall economic situation in the country.
Last month, the Australian new home loans increased by 0.4% and the forecast for this month was set at a increase of 0.1%. However, the actual figure came out much lower than expected, at a decrease of -0.5%
United States – Producer Price Index
On Thursday, at GMT 1:30 p.m., the US Department of Labor will release the Producer Price Index (PPI) figure, which measures the changes in the price of products and services bought by manufacturers and service providers in the country.
Since the higher cost of production is usually passed on to the consumers, a rise in the producer price index indicates future inflation. Hence, this data is vital for Forex trading as it is used by Forex investors as a leading indicator of the overall US economy.
Last month, the US month-over-month PPI increased by 0.3%, indicating inflationary pressure on the economy. Currently, the forecast for this month is that it would remain unchanged at 0.0%. Hence, market analysts would expect the US inflation to remain the same over the last month.
After forming bearish outside bar on March 21, 2017, the AUD/USD price has gone down by around 190 pips and found support near the 0.7490 level. Last week, the AUD/USD penetrated below this support level, but instead of finding additional bearish momentum, the pair formed a Doji bar.
As the Australian home loan figure decreased by 0.5% over the last month, but the US producer price index is expected to remain unchanged at 0.0%, we believe it would likely set a bearish fundamental outlook for the AUD/USD this week.
Although the formation of Doji last week is being considered as a signal of a tentative market condition, if the AUD/USD penetrates and closes below the 0.7490 level, it would likely attract additional bearish momentum in the market due to the fundamental forecast. Hence, Forex traders should look out for trading opportunities below this major support level around 0.7490.
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