Forex Market: AUD/USD trading outlook for January 18th

Written by Miroslav Marinov

Miroslav Marinov, a financial news editor at TradingPedia, is engaged with observing and reporting on the tendencies in the Foreign Exchange Market, as currently his focus is set on the major currencies of eight developed nations worldwide.

, | Updated: October 30, 2024

Friday’s trade saw AUD/USD within the range of 0.6824-0.7005. The pair closed at 0.6869, falling 1.66% on a daily basis, or at the sharpest rate since August 24th 2015, when it lost 2.23%. It has been the 8th drop in the past 10 trading days. In addition, the daily low has been the lowest level since March 31st 2009, when a low of 0.6794 was registered. In weekly terms, AUD/USD lost 1.21% of its value during the current week, while extending the slump from the week ended on January 10th. The pair has depreciated 5.73% so far during the current month, following three consecutive months of gains.

On Monday (January 18th) AUD/USD trading may be influenced by the following macroeconomic reports as listed below.

Fundamentals

Australia

Inflation estimate

At 23:30 GMT on Sunday (January 17th) the University of Melbourne will release its estimate of inflation in Australian economy as of December. Annualized inflation estimate for November pointed to a rate of 1.8%, or the same as in October. If inflation rate rises, this adds to the case of an interest rate hike by the Reserve Bank of Australia (RBA), which usually has a bullish effect on the national currency. It is so, because assets, offering higher yields tend to attract more international investors, who will look to buy the domestic currency and respectively, its demand will be boosted.

New Motor Vehicle Sales

At 0:30 GMT on Monday the Australian Bureau of Statistics is scheduled to report on new motor vehicle sales in the country for December. New vehicle registrations rose 1.0% to 97 696 vehicles in November, mostly due to a surge in sales of passenger vehicles (+0.7% month-over-month) and sales of other vehicles (+6.6%). On the other hand, sales of sport utility vehicles shrank 1.6% in November compared to a month ago.

New vehicle sales, as an indicator, reflect how strong consumer confidence is. In case consumers are willing to make large-ticket purchases, such as new automobiles, this suggests they have a greater confidence regarding their financial prospects. However, as new car sales account for a small portion of the Australian Gross Domestic Product, a potential increase would have a limited bullish effect on the Australian dollar.

M.L.Kings Birthday Holiday

Monday (January 18th) is Martin Luther Kings birthday holiday in the United States. Banks in the country are to remain closed.

Correlation with other Majors

Taking into account the week ended on January 14th and the daily closing levels of the currency pairs involved, we come to the following conclusions in regard to the strength of relationship:

AUD/USD to NZD/USD (0.9841, or very strong)
AUD/USD to GBP/USD (0.8628, or very strong)
AUD/USD to USD/JPY (0.4173, or moderate)
AUD/USD to USD/CHF (0.0649, or very weak)
AUD/USD to EUR/USD (-0.7749, or strong)
AUD/USD to USD/CAD (-0.9362, or very strong)

1. During the examined period AUD/USD moved almost equally in one and the same direction with GBP/USD and NZD/USD. The correlation between AUD/USD and NZD/USD was almost perfect.

2. AUD/USD moved almost equally in the opposite direction compared to USD/CAD during the week.

3. AUD/USD moved strongly in the opposite direction compared to EUR/USD during the period.

4. AUD/USD moved almost independently compared to USD/CHF during the week.