Forex Market: AUD/USD daily trading outlook

Yesterday’s trade saw AUD/USD within the range of 0.6873-0.7019. The pair closed at 0.7016, surging 1.57% on a daily basis. It has been the 4th gain in the past 14 trading days and also the sharpest one since June 2nd 2015, when the pair gained 2.17%. In addition, the daily high has been the highest level since January 13th, when a high of 0.7050 was registered.

At 10:07 GMT AUD/USD was up 0.01% for the day to trade at 0.7017. The pair touched a daily high at 0.7036 at 7:00 GMT, undershooting the daily R2 level, and a daily low at 0.6986 during the early phase of the Asian trading session. Resistance may be expected at the high from January 13th (0.7050) and then – within the 0.7075-0.7090 area. Support, on the other hand, may be received at the current daily low/the hourly 21-period EMA (0.6986/0.6994) and then – at the hourly 55-period EMA (0.6954).

On Friday AUD/USD trading may be influenced by the following macroeconomic reports as listed below.

Fundamentals

United States

Manufacturing PMI by Markit – preliminary reading

Manufacturing activity in the United States probably was little changed in January, with the corresponding preliminary Purchasing Managers Index coming in at a reading of 51.1, according to market expectations. If so, this would be the lowest reading since October 2012, when the PMI was reported at 51.0. In December the final seasonally adjusted PMI stood at 51.2, down from a preliminary 51.3.

According to Markits statement: ”…new order levels expanded only fractionally and at the weakest pace since September 2009. Anecdotal evidence cited softer underlying demand conditions, intense competition for new work and subdued business confidence among clients. Export sales were also close to stagnation in December, with manufacturers noting that the strong dollar continued to act as a drag on demand from abroad.”

”Manufacturing production growth moderated in response to weaker than expected new business intakes during December. The latest expansion of output levels was the least marked since October 2013. At the same time, capacity pressures eased in December, with backlogs of work decreasing at the fastest pace since September 2009. Nonetheless, payroll numbers rose at a solid rate that was slightly faster than seen during the previous month. This marked two-and-a-half years of sustained job creation across the manufacturing sector, and the pace of expansion was close to the average seen over this period.”

”Input prices continued to fall during the latest survey period, with the rate of decline accelerating slightly since November. Manufacturers commented on falling costs for a range of raw materials, particularly steel. However, factory gate charges rose for the third month running. Although only modest, the rate of output charge inflation picked up to its fastest since August.”

Values above the key level of 50.0 indicate optimism (expanding activity). In case the flash manufacturing PMI showed a worse-than-anticipated performance, this would have a moderate bearish effect on the US dollar. The preliminary PMI reading by Markit Economics is due out at 14:45 GMT.

Existing Home Sales

The index of existing home sales in the United States probably advanced 8.5% to a level of 5.18 million in December compared to November, according to the median estimate by experts. In November sales were 10.5% lower from a month ago to reach 4.76 million, or the lowest level since April 2014, when a figure of 4.66 million was reported. The introduction of new regulations on paperwork for home purchases was the reason behind the sharp drop in November. Sales of new single-family houses slumped 12.1% during the month, while sales of condos were up 1.7%. The median sales price climbed 0.4% in November.

In case the index rose at a steeper monthly rate than anticipated, this would have a limited-to-moderate bullish effect on the US dollar. The National Association of Realtors (NAR) is to release the official figure at 15:00 GMT.

Daily and Weekly Pivot Levels

By employing the Camarilla calculation method, the daily pivot levels for AUD/USD are presented as follows:

R1 – 0.7029
R2 – 0.7043
R3 (range resistance) – 0.7056
R4 (range breakout) – 0.7096

S1 – 0.7003
S2 – 0.6989
S3 (range support) – 0.6976
S4 (range breakout) – 0.6936

By using the traditional method of calculation, the weekly pivot levels for AUD/USD are presented as follows:

Central Pivot Point – 0.6914
R1 – 0.7005
R2 – 0.7140
R3 – 0.7231

S1 – 0.6779
S2 – 0.6688
S3 – 0.6553