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The Australian Dollar is currently straining at the top of the key downtrend channel which has bounded trade for the vast majority of this year.
There is at face value very little reason to expect a lasting break here. The US Federal Reserve remains upbeat on economic prospects and wedded to further monetary tightening this year assuming that the economic data hold up.
The Reserve Bank of Australia by contrast kept the key Official Cash Rate at its 1.50% record low for a 20th straight month in April. It is expected to leave it there until well into 2019 too, according to futures-market pricing.
But, even if that overall AUD/USD downtrend remains in place, there could be scope for some short-term gains this week. Wednesday will bring Chinese Gross Domestic Product data, to which the Aussie often reacts. Thursday will being Australian labour market data, amid signs that relatively strong jobs market is at last making its presence felt in tighter wages. RBA Governor Philip Lowe said last week that wage growth may finally have troughed. Markets will be on watch now for any confirmation that he is correct.
If neither data point underwhelms, then there could be scope for AUD/USD upside next week, even if it isn’t very long lived.
Resources for Traders
Whether you’re new to trading or an old hand DailyFX has plenty of resources to help you. There’s our trading sentiment indicator which shows you live how IG clients are positioned right now. We also hold educational and analytical webinars and offer trading guides, with one specifically aimed at those new to foreign exchange markets. There’s also a Bitcoin guide. Be sure to make the most of them all. They were written by our seasoned trading experts and they’re all free.
--- Written by David Cottle, DailyFX Research
Follow David on Twitter @DavidCottleFX or use the Comments section below to get in touch!
