Trading plan for 31/07/2018
The dollar remains stable to other major currencies. The exception is AUD, which grows 0.3%, to 0.7430 and USD / JPY, which rises 0.2%, to 111.25. There are mixed moods on the stock market. Shanghai Composite gently reflects, by 0.2 %, while Hang Seng falls by almost 0.5%. Nikkei225 is still looking for direction.
Over the night, we have received data from the PMI index for the Chinese services and industrial sectors. Both readings were slightly below expectations. USD / CNY did not react to the publication.
The currency market without major changes. There is not much to say EUR / USD, which continues the side trend started at the end of June and is currently at 1.1710. The holiday peace that is visible on the currency market may be affected by the Wednesday decision of the US Fed, which will concern interest rates and Thursday’s meetings of the Bank of England.
On Tuesday, the 31st of July, the event calendar is quite busy in important data releases. Beside the BoJ press conference, the global investors should keep an eye on Retail Sales, Unemployment Rate and Import Price Index data from Germany, CPI, Unemployment Rate and Revised GDP data from the Eurozone, the GDP data from Canada and Consumer Confidence, Personal Spending and PCE Core data from the US. No speeches are scheduled for today.
AUD/USD analysis for 31/07/2018:
AUD / USD increases by 0.3%, which results from the announcement of better-than-forecasted data on the growth dynamics of the number of building permits in monthly terms (6.40% vs. 1%) and annual 1.60% versus expected -6.0%.
Strong growth in new approvals and permits indicates a growing housing market. Because real estate generally leads economic developments – housing tends to thrive at the start of booms and wane at the onset of a recession. The figure can be used with others to forecast future growth in the economy as a whole. For this reason, Business Approvals is one of eight components used to construct the Conference Board Leading Index, a widely used index to forecast Australia’s economic course. A strong housing market also tends to lead consumer spending.
Let’s not take a look at the AUD/USD technical picture at the H4 time frame. The market remains locked in a horizontal correction between the levels of 0.7359 – 0.7445 in neutral market conditions. After a better than expected data, the bulls might trigger a move towards the golden trend line resistance around the level of 0.7445 and only a sustained breakout above this level will open the road towards the local highs at 0.7483.