Daily Market Recap - AUDUSD

The AUDUSD bounced off the lower bound support of 0.6857 to rally up 0.48 percent over the previous session. Bulls have managed to keep hold of the upwards momentum today as prices had originally slipped below the immediate support, pushing towards the 61.8 percent Fibonacci retracement zone at 0.6835.

The Aussie is currently testing the 0.6895 resistance level on the back of positive economic data. The unemployment rate in Australia dropped 0.1 points to 5.2 percent against the market consensus of a stable 5.3 percent. Furthermore, the actual number of added jobs increased to 39.9k from an expectation of 14k during the month of November. Both figures releases contributed to the growing optimism in the health of the Australian economy. Meanwhile, news of a decrease in trade tensions between the US and China also helped support the bullish momentum in the Australian dollar.

However, the Reserve Bank of Australia (RBA) remains cautious about the improvement in unemployment figures and are waiting to determine further indications of resilience in the economy. Analysts have mentioned that the RBA is placing a strong emphasis on job growth translating into wage growth which is currently not being felt. In this sense, the proposed rate cut in February 2020 is still on the table, providing some headwind to the AUDUSD pair.

Looking at the technical side, the AUDUSD is continuing to trade within the upward sloping pitchfork range since the start of the month. The bullish momentum from December is likely to pursue its course in the run-up to the new year. A softer USD in the recent trading sessions has helped underpin the bullish bias in the Aussie. Although the risk of high volatility during thinly traded markets around the holidays could jeopardize any significant advances in the pair. The RSI is floating slightly below the 70 marks, indicating there will likely be a short-term correction on the horizon. On the upside, we would be looking for the AUDUSD to breach above the 0.6895 level in order to test the monthly high of 0.6938. Should the pair fail to close above, we could expect further sideways movement above the support of 0.6857.

(Chart Source: Tradingview 20.12.2019)

Looking ahead, the major events to look out for towards the end of the week will be the outcome of the Brexit timetable vote and the release of the US quarterly GDP figure. The AUDUSD will be highly dependent on any news around global trade especially regarding Chinese economic activity.

Disclaimer: This material has been created for information purposes only. All views expressed in this document are my own and do not necessarily represent the opinions of any entity.