What a week it was. The markets definitely showed up to play last week but what will it have installed for us this week. Let’s start off with the Aussie dollar. After a tight week for the AUD/USD pair, trading only in an 80 pip range, how will it hold up against the dollar? With no major announcements coming out this week and increasing US China tension weighing in heavily on the Aussie it will show strength to hold around 0.72.
Victoria’s continued lock-down, which began at the beginning of August has done little to slowdown the infection rate. Deaths climbed to a record one day increase overnight with 25 new fatalities recorded. However the Health Minister Greg Hunt believes the curve is beginning to flatten but that the lockdown could possibly extend. With no economic news coming out to help the Aussie, all eyes will be on the RBA Meeting Minutes on Tuesday.
AUD/USD Technical expectancy
For the Bull. The technical and psycological barrier I would have to say is the flat .7200. Consider this to be the first target and a break beyond this we could see it travel to 0.724.
For the Bears. I will go against the grain with this one and join the Bears camp. With little coming out to affect the currency, the strengthening of the dollar, gold looking to make another comeback and lets not forget the USD China tension and coronavirus cases growing in Victoria and NSW, will see the currency stuggle to maintain solid at these levels. Consider an initial target of 0.7060 and a break beyond that could confirm the trend and see it continue to a flatline of 0.7000 and 0.9640.
Wednesday CPI Figures
On Wednesday we will see the UK CPI figures.
The Consumer Price Index m/m (CPI) reflects the change in prices for 700 separate consumer goods and services in the given month compared to the previous month. So why is this important to the currency? CPI is one if the indicators of inflation. The index growth may have a positive effect on the British pound quotes. This month we will see how the Coronavirus has affected the economy. With close to 1100 new cases of infection recorded day on day it has left officials feeling a little under the weather themselves. Very little change is expected in the CPI figures this month.
Canada CPI numbers
With Canada riding the wave of positivity as it tackles the virus head on and coming out of it a lot stronger than its counterparts, it’s going to be interesting to see the CPI figures Year on Year on Wednesday. however expectation is bullish on this.
FOMC Thursday – USA
With a 6% mortality rate in the USA from COVID-19, you can say that this cahrt is nothing but curved. In fact it looks more like the race track at Monaco with not a straight line in sight. Commonly a slow month as many financial service professionals take leave due to the summer break, I see a very different August this year. Many have been working from home or have taken their leave to deal with COVID. Furthermore, we have seen an increase in the unemployment rate in the Financial sector in the month of July coming in at 4.7%. Traders being the cats that they are, will be wanting to make there money the only way they know how. Trade.
And that’s the week folks. A lot of politics coming our way so stay tuned for updates (yawn). Keep safe, keep the masks on and make sure to register with Asia Capital Markets.