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AUDUSD Development of an Upward Correction

11/8/2022 1:46 PM

After the publication of Friday's macroeconomic statistics from the US, the AUD/USD pair continued to correct, holding near the local highs of November 2 and developing the "bullish" momentum with the target at 0.6525.

A negative factor that pushed the market to sell off the US currency was an increase in unemployment by 0.2% at once, from 3.5% to 3.7%, with preliminary estimates of 0.1%, while the average hourly wage continued to increase, exacerbating inflation risks. The news came as a surprise to the market, resulting in the USD Index falling by 1.94%, while minor currencies strengthened their positions.

The Australian dollar was further supported by a 0.6% MoM retail sales growth in October, in line with the forecast and September value, which suggests that high inflation does not limit consumers from buying goods. The Reserve Bank of Australia (RBA) notes that the labor market in the country remains strong, and the unemployment rate is at its lowest level in almost 50 years at 3.5%, while in recent months, there has been an increase in wages. The regulator predicts that the wage price index (WPI) will rise from 2.6% to 3.75% by mid-2023 but fears a slowdown in global economic growth and rising inflation. According to experts, its peak will occur at the end of 2022, and then it will begin to decline to the target range of 2–3%, and therefore the bank's further monetary policy will depend on incoming macroeconomic indicators, however, the Board of Directors agrees that the percentage rate will be further increased.

The long-term trend is downwards. After the decline in quotes in early November to 0.6290, the price began to correct towards 0.6525, after reaching which a new downward impulse may develop with the target at 0.6290.

The medium-term trend is upwards. Last week, market participants unsuccessfully tested the key trend support 0.6341–0.6323, after which the price rose to the target zone 2 (0.6547–0.6529), the breakout of which will open the way for the growth of quotations to the area of ​​zone 3 (0.6727–0.6709).

Resistance levels: 0.6525, 0.6725. | Support levels: 0.6290, 0.6190.

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