Friday’s trade saw AUD/USD within the range of 0.7055-0.7143. The pair closed at 0.7085 to remain unchanged on a daily basis. AUD/USD appreciated in 7 out of the past 18 trading days. In addition, Fridays high has been the highest level since January 6th, when a high of 0.7172 was registered. In weekly terms, AUD/USD surged 1.17% last week, while extending the gain from the week ended on January 24th. The pair lost 2.90% of its value in January to mark its first drop in the past four months and also the sharpest one since July 2015, when it plummeted 5.24%.
At 10:21 GMT AUD/USD was losing 0.25% on the day to trade at 0.7067. The pair touched a daily low at 0.7044 during the early hours of the Asian trading session, undershooting the lower range breakout level (S4), and a daily high at 0.7085 during early Asian trade.
On Monday AUD/USD trading may be influenced by the following macroeconomic reports as listed below.
Fundamentals
United States
Personal Spending, Personal Income
Personal spending in the United States probably rose for an 8th straight month in December, up 0.1%, according to market expectations, while personal income was probably up for a 9th consecutive month in December, increasing at a monthly rate of 0.2%. Consumer spending, which accounts for over two thirds of the nations GDP, rose 0.3% in December, or at the fastest rate since August 2015.
At the same time, personal income increased 0.3% during the same month, while disposable personal income (DPI) rose USD 34.5 billion (or 0.3% as well). Private wages and salaries were up by USD 34.4 billion in November, compared to an increase by USD 45.7 billion in the prior month. Government wages and salaries were USD 2.8 billion higher in November, compared to an increase by USD 1.5 billion in October.
Higher-than-expected rates of increase imply good employment conditions and, therefore, are dollar positive. The Bureau of Economic Analysis is to publish the official figures at 13:30 GMT.
Manufacturing PMI by Markit – final reading
The final estimate of the Manufacturing Purchasing Managers Index for January probably confirmed the flash estimate of 52.7, which was reported on January 22nd. In December the final seasonally adjusted PMI stood at 51.2, inching down from a preliminary value of 51.3.
According to the preliminary report by Markit, ”…the pace of expansion was comfortably above the 26-month low recorded in December. Survey respondents mainly commented on higher output levels in response to positive new business trends and expectations of improving domestic demand over the months ahead.”
”Volumes of new work strengthened in January, after coming close to stagnation at the end of 2015. The latest increase in new orders was the fastest for three months. However, new export sales continued to rise at only a marginal pace, which manufacturers generally linked to the strong dollar. Companies that reported an overall upturn in new work mostly cited improving domestic economic conditions. The main exception to the wider trend was among manufacturers facing cutbacks in new orders from clients in the oil and gas sector”, Markit stated.
Values above the key level of 50.0 indicate optimism (expanding activity). In case the final PMI for January confirmed or came above the preliminary reading, this would cause a moderate bullish impact on the US dollar. The final reading is due out at 14:45 GMT.
Manufacturing PMI by the ISM
Activity in United States’ manufacturing sector probably improved in January, with the corresponding manufacturing PMI coming in at a reading of 48.5, according to expectations, up from 48.2 in December. The latter has been the lowest PMI reading since June 2009, when the gauge was reported at 44.8.
The New Orders Index came in at 49.2 in December, up from 48.9 in November. The sub-gauge of production was reported at 49.8, advancing from 49.2 in November. The index of employment slid to a value of 48.1 in December from 51.3 in the preceding month. The gauge of prices was at 33.5 in December, down from 35.5 in November, which suggested lower prices of raw materials for a 14th month in a row. In December, 6 manufacturing industries reported growth, 10 reported contraction and 2 registered no change in conditions, according to the report by the Institute for Supply Management (ISM).
In case the manufacturing PMI improved more than anticipated in January, this would have a moderate-to-strong bullish effect on the US dollar. The ISM is to release the official index reading 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 – 0.7093
R2 – 0.7101
R3 (range resistance) – 0.7110
R4 (range breakout) – 0.7133
S1 – 0.7077
S2 – 0.7069
S3 (range support) – 0.7060
S4 (range breakout) – 0.7037
By using the traditional method of calculation, the weekly pivot levels for AUD/USD are presented as follows:
Central Pivot Point – 0.7048
R1 – 0.7180
R2 – 0.7275
R3 – 0.7407
S1 – 0.6953
S2 – 0.6821
S3 – 0.6726
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