AUD/USD Likely Retrace Amid Forecast of Increasing Unemployment Claims in US

AUD/USD – Technical Analysis for Forex Trading & CFDs.

 

United States – Unemployment Claims

On Thursday, at GMT 2:30 p.m., the US Department of Labor will release the unemployment claims figure, which measures the changes in the number of people who claimed for unemployment insurance over the last week.

Forex traders consider the unemployment claims data to be one of the most important fundamental indicators of the US job market. This is primarily because unemployment and consumer spending has direct correlation and an increasing number of unemployment claims indicate lower consumer spending in the economy, which makes up the bulk of the economic activity in the United States.

Last week, the US unemployment claims figure came out came out at 275,000 and this week, the forecast is set at a slight increased figure, at 277,000.

Australia – Private Sector Credit

On Friday, at GMT 1:30 a.m., the Reserve Bank of Australia will release the month-over-month Private Sector Credit data, which measures the changes in the total value of new credit issued to consumers and corporations in the country over the previous month.

Forex investors consider the private sector credit to be an important fundamental indicator of the Australian economy as borrowing and spending are highly correlated. Consumers and businesses only take out credit when they feel confident about their ability to pay it back in the future. Hence, it also acts as a measure of consumer and business confidence.

Last month, the private sector credit in Australia increased by 0.5% and the forecast for this month is currently set 0.5% as well.

Trade Recommendation for the AUD/USD

On December 14, 2016, the AUD/USD broke below the retracement uptrend line and resumed the downtrend. Since then, so far, the AUD/USD price has gone down by around 240 pips after this uptrend line was broken.

As the Australian private sector credit is expected to grow at the same rate compared to last month, but the US unemployment claims figure is expected to go up a little this week, we believe it would have a bullish effect on the AUD/USD price in the last week of 2016.

Furthermore, given the holidays in major markets around the world, there would be a very limited directional movement to support additional bearishness in the market this week.

Under the circumstances, it would be recommended that Forex traders consider placing a BUY order at market price for the AUD/USD with their Forex brokers as soon as the pair closes above the 0.7225 level on the daily time frame. A possible profit target for this trade would be around the 0.7285 level. On the other hand, Forex traders should consider placing a stop loss order below 0.7190.

Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes about various tech and financial topics. You can reach him at contact@asifimtiaz.com

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Asif Imtiaz

Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes about various tech and financial topics. You can reach him at contact@asifimtiaz.com

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