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AUDUSD Market Update

8/31/2022 12:46 PM

The AUD/USD pair continues its unstable dynamics, correcting around 0.6884 after releasing poor macroeconomic statistics.

Australia's housing market data for July was released yesterday, with building permits falling sharply by 17.2% against a forecast of 5.0%, while construction of the rest of the property fell by a significant 43.5%, which was the second contraction in a row, and this allows us to speak about the negative impact of the increase in interest rates by the Reserve Bank of Australia (RBA), which began in May this year. The Q2 volume of completed construction works decreased by 3.8%, although analysts expected an increase of 0.9%, while the volume of issued building permits for the construction of private homes increased by 0.7% after falling by 1.8% a month earlier. Also to the construction sector, the negative dynamics continue in the lending sector: the rate of loans issued is actively declining, and in July, the overall increase corrected to 0.5% from 0.6% a month earlier, and for the private sector — the sector — to 0.7% from 0.9% on the back of increased cost of servicing loans due to a sharp increase in interest rates.

In the meantime, the US dollar has temporarily slowed its active growth, and for the second session in a row, it has been holding around 108.500 in the USD Index. The statistics published yesterday unexpectedly were positive: the number of open vacancies in the labor market from JOLTS amounted to 11.239M, having increased from 11.040M earlier, and the consumer confidence index from the Conference Board returned to levels above 100.0 points, amounting to 103.2 points instead of 95.3 a month earlier.

On the daily chart, the price is correcting, completing the formation of the Head and shoulders reversal pattern. Technical indicators have reversed and are holding a local sell signal: fast EMAs on the Alligator indicator cross the signal line downwards, and the AO oscillator histogram forms downward bars in the sell zone.

Resistance levels: 0.6928, 0.7122. | Support levels: 0.6847, 0.6681.

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