AUD bulls wait on inflation data

26 July, 2017

The Australian dollar is certainly popular with the markets at present after the recent strong rises in the AUDUSD. As a result, there is a lot of talk today about the inflation rate data due out shortly. Currently when it comes to the Australian economy and the case for further interest rate rises inflation is the missing ingredient. The Reserve Bank of Australia believes that inflation will lift in the later part of this year to around 2% which is a good target to have, but if we see a jump earlier it could certainly be a boost to the upside for the AUD. One thing that will be weighing on this figure will be low fuel prices which have had an impact globally, and also the high AUD which won't help at all when it comes to imports. However, the trimmed mean forecasted CPI of 1.8% is a slight fall from the 1.9% from the last reading, but this will be the one to watch as the RBA pays the most attention to it. If we saw a reading of 1.9%+ I would anticipate some strong movements in the AUDUSD.

On the charts the AUDUSD has been trending upwards recently, but it has taken a breather in the last few days and as USD strength was slightly better today. Certainly the market is looking for the next move and inflation will provide it most likely. If we do see a weaker result I would expect to see the AUDUSD shift down to the 38.2 fib level and target the 0.7761 support level, and it would be knee jerk reaction given the recent market volatility. In the event we do see strong inflation and continued enthusiasm for the AUD, the climb higher would likely target that key 80 cent level which is always a hard one to crack. After that I would expect traders to target the 50.0 fib level around 0.8154.

Oil markets have also been awoken by OPEC recently but also by private inventory data out today. While OPEC is certainly trying to stoke the flames with further production cuts, it's the drawdown in the US which has got the bulls really moving. With a large move of -10.23M barrels the market has jumped on this news and rushed higher. There will be as a result of this very large expectations on tomorrows US crude oil inventory data to show a stronger drawdown than the expected -3.0M barrels that has been forecast.

Oil on the charts has catapulted up in one of the strongest bullish moves seen in some time. It has cracked through resistance at 47.25 after today's announcement and is looking to really test the trend line in play. If we do see a strong drawdown tomorrow, it's very much plausible that the market may take it as a very bullish signal and look to target resistance at 49.99 and ignore the trend line all together. However, it's worth nothing that private data and the Department of Energy data don't always line up and hence why I have some reservations about expecting a large drawdown. In the event it's not aligned expect former resistance at 47.25 to be tested strongly by the market.

Source link  
Oil slips further ahead of OPEC meeting

Oil markets have suffered another blow today as US oil inventories showed an increase of 2.07M barrels (-2.1M exp), while at the same time US gasoline...

Trade war fears to dominate market

After imposing tariffs on steel and aluminum imports on its closest allies, the U.S. will be facing enormous criticism at the G7 summit on Friday in Quebec...

USD in focus ahead of Non-farm

The USD will be in focus tomorrow as it's a key test of strength with the upcoming non-farm payroll data on the US economy. So far the markets...

Italy's risk contained; Trade war not on hold

Investor fears over Italy's political turmoil eased on Wednesday, leading to a sharp recovery in Italian assets, the Euro and global equities. Investor confidence that...

Key events to watch this week

After falling to a six-and-a-half month low against the dollar on Friday, the Euro bounced back early Monday following the Italian president's blocking...

Dollar hits new 2018 high after FOMC

While the financial markets continue to remain volatile with a number of different news events being monitored, the USD did manage to hit another...

Euro shakes off political risk

The Euro strengthened slightly early Thursday, to trade at 1.1837 after hitting a new five-month low of 1.1761 the previous day. It seems that the single...

Risk aversion returns on higher yields

U.S. consumers are becoming more confident to spend. U.S. retail sales increased 0.3% in April, and March figures were revised up to 0.8% from 0.6%. When...

U.K. jobs under the radar

Stocks in Asia were uninspired by the slight gains on Wall Street during Monday trading. Although the easing of U.S.- China trade tensions was...

In the past 24 hours Bitcoin has gained 2.36% and reached $6795.95. Open your trading account with the best cryptocurrency brokers on special terms today.

In the past 7 days the EUR/USD pair has lost -1.7729% and is now at $1.1587. Start trading and making money on Forex today.

In the past 7 days Ethereum has gained 12.48% and is now at $541.91. Have the most popular cryptocurrencies compared online 24/7.

Top Brokers offering Forex Market Analysis

Forex Currencies Forecasts

Top 10 Forex Brokers 2018

# Broker Review
4FIBO GroupFIBO Group80%
9FP MarketsFP Markets70%