Global macro overview for 20/07/2018
An increase in the number of jobs by approximately 50,000 it’s the best result for many months. In addition, this is mainly due to changes in the field of full-time employment, which is additionally accompanied by an increase in the participation rate. Good information from this sphere of the economy is not surprising, but today’s report can be called simply sensational. Building on it a more constructive look at the prospects of the Australian currency would be a mistake. First of all, it does not contribute much in the context of the future RBA policy, the market does not value even 50%. the probability of making a raise before the end of next year. The bank in the weekend report presented last week sounded rather dovish and did not announce anything that its communication with the market in the coming months would be more advantageous for the currency. At the same time, the external environment is definitely negative for AUD. The Australian economy is on the frontline of currency wars. In the group of the major currencies, there is no other, which can rebound so strongly by the exacerbation of the situation on the US-China line. At lowering industrial metals like copper, the downward pressure on AUD should be maintained. In addition, the risky currencies are not supported by the USD/CNY exchange rate rising steadily for several days. It also does not help the moods on the closely watched Shanghai stock exchange, where the main index after the first clear rebound from the July bottom, again starts to slip and erase correctional increases. In such an environment, the global investors should remain negative towards AUD, not only against the USD but also, for example, CAD, which should be supported by the rebound of the oil price.
Let’s now take a look at the AUD/USD technical picture at the H4 time frame. The market is trading very close to the level of 0.7311 that is a technical support for the price. The bulls are still defending this support, which resulted in a larger Pin Bar that closed around its own highs. Nevertheless, the price is still not bouncing strongly higher, so it seems the market will now consolidate around this levels. In a case of a stronger bounce, the next target is seen at the level of 0.7445. In a case of a breakout lower, the next target for bears is seen at the level of 0.7160.