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.

DailyFX Table


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).


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).

For More Updates, Join DailyFX Currency Analyst David Song for LIVE Analysis!

Click HERE for a Entire DailyFX Webinar schedule.

DailyFX Calendar

Click Here for a DailyFX Calendar

If you’re looking for trade ideas, check out a Trading Guides.

Read More:

DailyFX Roundtable: BoJ, Fed and BoE Preview

GBP/USD to Take Cues From FOMC/BoE Interest Rate Outlook

Technical Weekly: Is USD/CHF a Tell?Gold Prices Back Below 1200- Here’s a Game Plan

— Written by David Song, Currency Analyst

To hit David, e-mail Follow me on Twitter during @DavidJSong.

To be combined to David’s e-mail placement list, greatfully follow this link.

About author

Alarm bell in China property bubble

China’s richest man, real estate magnate Wang Jianlin, has warned the country’s property market is the “biggest bubble in history”. Picture: Fred Dufour/AFP FOUR Chinese ...