Home Forex Market Analysis AUDUSD Pair Trends on the Oversold Zone Ahead of the Wage Index...

AUDUSD Pair Trends on the Oversold Zone Ahead of the Wage Index Data

132
0
AUDUSD Pair Trends on the Oversold Zone Ahead of the Wage Index Data
  • Australia is set to announce a third Covid-19 wave with the soaring number of cases/deaths. 
  • Sydney is currently in its 8th week of state lockdown and staring at a loss of approximately A$2 trillion (US$1.5 trillion).
  • US manufacturing production (MoM) is projected to increase 0.6% in July 2021 (MoM) from a decline of 0.1% in June 2021.

The AUDUSD lost 0.58% as of 10:00 am GMT on August 16, 2021, from the previous day’s close. It fell to 0.7319 from a high of 0.7373. The Australian dollar has come under pressure from the dollar with its lead cut to a +2.61% price change in the 1-year change analysis. The AUD lost 0.40% as of this writing against the Japanese yen. It, however, managed to gain 0.24% against the Canadian dollar. 

Coronavirus cases

Australia is on the brink of announcing a third Covid19 wave with the number of cases soaring into the week. As of August 15, 2021, new daily cases rose to 440 and a 7-day average of 395. 

Rising Coronavirus cases in Australia

At the time, 5 deaths were recorded, which was interesting since 0 deaths have been noted in Australia from October 21, 2020, to July 15, 2021. The vaccination rate is currently at 21.0% with up to 5.33 million people fully vaccinated out of 15.2 million doses issued. 

Covid-19 is threatening to push Sydney and the Australian economy into recession. Sydney is currently in its 8th week of state lockdown and staring at a loss of approximately A$2 trillion (US$1.5 trillion). 

The surge in cases has also meant that the recent decrease in Australia’s jobless rate may also come to an end. This unemployment rate dropped from 6.9% in October 2020 to 4.9% in June 2021.   

Declining Jobless rate in Australia (2020-2021)

June’s unemployment rate was the lowest in 8 months. The number of those looking for full-time jobs decreased to 460,000 (-31,000) while those applying for part-time jobs reached 219,000 (+9.400). However, restrictions have led to business closures in most Australian states meaning that the jobless rate will increase into Q3 2021. 

The City of Melbourne has seen office occupancies decrease to 12% in August 2021 from a high of 26% in June 2021. Sydney, which had seen a recovery of 70% (in office occupancies) in June 2021, was down to 7% by July 2021. 

Financial patronage by the government towards public transport has declined 80%. Passengers are expected to pay as much as A$40 (US$30) per trip. A survey in Queensland indicated an 8.4% drop in passengers that will use public transport in the future (post-lockdown). 

Expected releases

Australia is slated to release the MI leading (MoM) that slid -0.1 in June 2021. Analysts are of the view that the wage price index for Q2 2021 (QoQ) will remain 0.6%. The recent increase in restrictions may lead to a decline in the annual wage price index that stood at 1.5% in Q2 2021. 

US manufacturing production (MoM) is projected to increase 0.6% in July 2021 (MoM) from a decline of 0.1% in June 2021. Business inventories are also expected to increase 0.8% from 0.5% recorded in June 2021 (MoM). 

Technical analysis

The AUDUSD pair crossed the support line at 0.7435 and has been on a downward spiral. However, there is still a low selling volume indicating a shift from the downside to the upside. 

Technical chart of the AUDUSD pair

The 1-day chart shows that the pair is trading below the 9-day EMA at 0.7358. It dropped below 0.7345 before rebounding. In the short term, it may continue the decline towards 0.7167 after confirming the downward breakout. 

The 14-day RSI is moving towards the oversold region at 37.64 with a decline in volatility. A reversal would push the price to 0.7435 and 0.7600.  

LEAVE A REPLY

Please enter your comment!
Please enter your name here

  +  25  =  35