Hello Traders,
On Friday, NFP data came way short than expected at 138K against 185K and as a result, the USD depreciated against major currencies. Of note was the break-down against the Aussie which as we have seen has continued to strengthen all throughout the Asian session. Other than the weak employment data which many expect should at least change the Fed’s trajectory of their interest rate hikes, the emerging diplomatic tension against Qatar by other Gulf countries with Saudi Arabia leading the pack has solidified the Aussie. Well, Qatar is the world leading exporter of LNG and as long as conflict continues-and a consequent possibility of a blockade to their main export countries, Australia-with their major LNG projects-should temporarily be the leading supplier of LNG in the world. This possibility is pumping up the Aussie and right now, there is a buy signal as it tests a major resistance trend line against the USD. The possibility of Aussie strengthening further will more so depend on tomorrow’s RBA position of their OCR. Should they remain neutral; the AUD will most likely break and close above the resistance trend line. Another possibility is if the US continues to churn out negative economic data like last week’s NFP. Investors are actually noticing weakness with the USD despite the positive unemployment rate at 4.3%-this is the lowest in 16 years. It should be mentioned that inflation and average hourly earnings are still growing at a slower pace and this has ramifications on other sectors of the economy like consumption and personal expenditure.
Trading the Aussie is simple. In the weekly chart, it is obvious that price action is reversing from significant levels-at 50%-61.8% Fibo levels with stochastics both in the daily and weekly charts signaling buys. Further, looking at the daily chart, we can see that test of resistance trend line as price action test the 0.75 level.
Trade as follows:
Buy Limit: 0.742-0.745
Stop Loss: 0.7350
Take Profit: Target a 1:3 risk reward ration from a point of sale. Ideal take profit should be at 0.775-0.78 levels.
You should watch out for Factory Orders—0.2%e Vs 0.5% and ISM Non-Manufacturing activity-57e Vs 57.5 later in the in the NY session.
Have a good trading day.

audusd daily chart-05.06.2017

Source: Dalmas Ngetich

audusd weekly chart-05.06.2017

Source: Dalmas Ngetich

3 thoughts on “AUDUSD DAILY ANALYSIS FOR 05.06.2017”

  1. Alysa Sage says:

    Hi, Dalmas Ngetich,

    I’m currently a bear on this pair, just from a fundamental view. I’m still working on my analysis, but it seems like the Aussie can’t hold onto gains because it’s so dependent on commodity exports to Asian countries, namely China whose economic demand seems to be shrinking. This makes it a weaker economy than the US that looks to still have plans of a rate hike in June. Aussie inflation is just below 2% target at 1.9%; a rate hike at this point might not benefit their growth target. On the stochs. 4HR chart, a good sell is in place. Just waiting for a MAC to the downside to confirm this bias on a 15M chart. I hope this helps with your analysis, as it made me take a second look at mine. Happy trading!

    1. Dalmas Ngetich - FOREX.TODAY says:

      Thanks Sage.
      For sure we have to look analysis from different point of views and fundamental considerations too. Yes, China is slowing down and as always it tends to drag the global economy with it. I’m keen on how what the PBOC and their commerce departments will say about their economy and most importantly their projections. if it is positive, then we have to realign our analysis and position and load more Aussie and Kiwi. Looking at the historical relations between US rate hikes and commodities, they are positively correlated and yes, the Aussie might dip but they bounce back stronger. Also, with the negative data streaming in and with Kashkari’s comments, the Feds might not even raise rates this month.

  2. Alysa Sage says:

    Hey,

    Thanks for taking the time to reply. It’s definitely a lot to go over. I’m going to be doing research all day today about the market movements. I need to take a second look at China’s monetary policy and economic outlook so I can find a correlation with the Kiwi and Aussie.

    Best of luck trading today, Aussie really pulled it off for the bulls!

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