AUD/USD Bull-Flag Formation Unfolds Ahead of NFP, RBA Rate Decision

Talking Points:

AUD/USD Eyes Nov High; Bull-Flag Formation Unfolds Following Record Trade Surplus.

GBP/USD to Track Late-2016 Range as BoE Caps Inflation Outlook.

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AUD/USD Daily

AUD/USD Daily Chart

Chart – Created Using Trading View

  • AUD/USD might continue to retrace a decrease from a Nov high (0.7778) as a bull-flag arrangement appears to be personification out after Australia posted a largest trade over-abundance given a array began in 1971; will keep a tighten eye on a Relative Strength Index (RSI) as it flirts with overbought territory, with a decisive pierce above 70 lifting a risk for a serve allege in a sell rate as a bullish movement gathers pace.
  • Ahead of a RBA’s initial process assembly for 2017, a U.S. Non-Farm Payrolls (NFP) news might quell a new allege in a aussie-dollar as a economy is approaching to supplement another 175K jobs in January, yet a slack in Average Hourly Earnings might serve moderate a box for a Mar rate-hike and furnish near-term headwinds for a greenback as a Federal Open Market Committee (FOMC) warns ‘market-based measures of acceleration remuneration sojourn low; many survey-based measures of longer-term acceleration expectations are small changed, on balance.
  • Even yet a Reserve Bank of Australia (RBA) is widely approaching to keep a stream process during a Feb 7 seductiveness rate decision, a alleviation in a terms of trade might inspire Governor Philip Lowe and Co. to adopt a hawkish opinion for financial policy, as a executive bank argues ‘globally, a opinion for acceleration is some-more balanced than it has been for some time;’ nevertheless, some-more of a same from a RBA might lead to a singular marketplace reaction, with a broader opinion for AUD/USD still slanted to a downside as Fed Fund Futures continue to prominence a larger than 60% luck for a Jun rate-hike.
  • With a RSI pulling a proceed into overbought territory, a topside targets sojourn adored over a days ahead, with a subsequent jump entrance in around 0.7730 (61.8% retracement) to 0.7740 (78.8% expansion) followed by 0. 7770 (61.8% expansion) to 0.7778 (November high).

GBP/USD Daily

AUD/USD Bull-Flag Formation Unfolds Ahead of NFP, RBA Rate Decision

Chart – Created Using Trading View

  • The bearish marketplace greeting to a Bank of England (BoE) seductiveness rate decision might open adult a late-2016 operation for a British Pound as GBP/USD creates another unsuccessful try to tighten above a Fibonacci overlie around 1.2630 (38.2% expansion) to 2.12680 (50% retracement); a unanimous opinion to keep a stream process keeps a broader opinion for argent slanted to a downside generally as a U.K.’s depart from a European Union (EU) clouds a mercantile opinion for a region.
  • Even yet a Governor Mark Carney and Co. sees faster enlargement over a process horizon, it seems as yet a executive bank is in no rush to mislay a rarely accommodative process as a acceleration opinion was mostly in-line with a Nov forecast, with officials still raised acceleration to rise during an annualized 2.8% in a second entertain of 2018; a wait-and see proceed by both a BoE Fed might encourage range-bound conditions via a initial entertain of 2017 as new remarks from Chair Yellen and Co. tame expectations for a Mar rate-hike.
  • As GBP/USD carves a bearish harami (outside-day) candle, a downside targets will be on a radar going into a initial full-week of February, with a break/close subsequent 1.2460 (61.8% expansion) to 1.2490 (38.2% retracement) opening adult a subsequent segment of seductiveness around 1.2370 (50% expansion) followed by 1.2270 (23.6% retracement).

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— Written by David Song, Currency Analyst

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