AUD/USD and NZD/USD Fundamental Analysis: Aussie Trade in Focus

Highlights

• The AUD/USD and the NZD/USD were flat this morning.
• This morning, trade data from Australia will draw interest as investors respond further to the overnight FOMC meeting minutes.
• However, US ADP nonfarm and the all-important ISM Non-Manufacturing PMI will likely have more impact.

It is a relatively busy start to the day for the AUD/USD. Australian trade data for May will be in focus this morning. Weaker economic indicators from China and other economies suggest lackluster demand, which would impact trade terms.

Economists forecast the Australian trade surplus to narrow from A$11.158 billion to A$10.500 billion. A more marked narrowing would weigh on the Aussie.

While the trade data will provide direction, we expect the Aussie and NZD/USD to respond further to the overnight FOMC meeting minutes.

The European Session

German factory orders will draw interest early in the European session. Another decline in orders would fuel recessionary fears and test buyer appetite for riskier assets and commodity currencies.

However, Eurozone retail sales numbers should have a limited impact on the pairings.

The US Session

It is a busy day ahead on the US economic calendar. US ADP nonfarm employment change and ISM Non-Manufacturing PMI numbers will move the dial.

A sharp pickup in service sector activity and a better-than-forecast rise in nonfarm employment would support a hawkish Fed policy outlook. However, investors should look beyond the ISM headline PMI, with the prices and employment sub-components likely to garner interest.

Other stats include the weekly jobless claims and JOLTs job openings that need consideration ahead of tomorrow’s US Jobs Report.

AUD/USD Price Action

Daily Chart

The Daily Chart showed an AUD/USD hold above the psychological $0.6650 support level. A fall through the 50-day EMA ($0.66878) signaled a near-term bullish trend reversal. The AUD/USD also remained below the 200-day ($0.67494), signaling bearish momentum over the longer term.

Notably, the 50-day EMA eased back from the 200-day EMA and reflected bearish momentum following the Wednesday slide.

Looking at the 14-Daily RSI, the 46.04 reading signals a moderately bearish trend, aligned with the 50-day EMA.

4-Hourly Chart

Looking at the 4-Hourly Chart, the AUD/USD faces strong resistance at the $0.67 psychological level. After the Wednesday loss, the AUD/USD sits below the 200-day ($0.66887) and 50-day ($0.66751) EMAs, a bearish signal. Significantly, the 50-day EMA eased back from the 200-day EMA, signaling a run at the current support band of $0.6615 – $0.6600.

The AUD/USD must break through the 50-day and 200-day EMAs to retarget the lower level of the resistance band of $0.6750 – $0.6770.

Looking at the RSI, the 14-4H RSI reading of 45.72 indicates a moderately bearish stance, with selling pressure outweighing buying pressure. The RSI is aligned with EMAs and supports a look at the $0.6615 – $0.6600 support band.

NZD/USD Price Action

Daily Chart

The Daily Chart showed an NZD/USD run at the psychological $0.6200 psychological level ahead of the busy Thursday session. However, the EMAs send mixed signals. Despite a bearish Wednesday, the Kiwi dollar remained above the 50-day EMA ($0.61659) to target the 200-day EMA ($0.62216).

Notably, the 50-day EMA narrowed to the 200-day EMA, reflecting bullish momentum over the near term. However, the Kiwi sat below the 200-day EMA, signaling a bearish longer-term trend.

Looking at the 14-Daily RSI, the 53.36 reading signals a moderately bullish trend, supporting a breakout from the 200-day EMA ($0.62216) to target the lower level of the $0.6234 – $0.6250 resistance band.

4-Hourly Chart

Looking at the 4-Hourly Chart, the NZD/USD faces strong resistance at the $0.62 psychological level. Despite the bearish Wednesday session, the NZD/USD sits above the 200-day ($0.61553) and the 50-day ($0.61538) EMAs, supporting a run at the $0.6234 – $0.6250 resistance band.

Notably, the 50-day EMA converged on the 200-day EMA, with a bullish cross of the 50-day EMA through the 200-day EMA supporting a breakout session.

The 14-4H RSI reading of 57.26 indicates a bullish stance, with buying pressure outweighing selling pressure. A return to 60 would align the RSI with the EMAs and signal a run at the current resistance range of $0.6234 – $0.6250.