Australian Dollar managed to sustain the bullish momentum against the US dollar despite the positive economic reports which were supposed to support the US dollar gains.
The Australian economy is hugely affected the US political events such as the US-China trade tension. Australian Building Approval report is going to be published soon. The reading is expected to increase to 0.1% from -15.5%. Private Capital Expenditure might drop to 0.5% from 2.0%. Due to this report, certain indecision and higher volatility are likely to impact the Australian dollar gains. In case, if the upcoming economic data turns out to be weak, the greenback might assert strength and gain ground/ The greenback has been already supported by the positive Consumer Confidence report.
US Consumer Confidence report also supported the US currency. Consumer confidence report showed an increase in May as households grew more optimistic about the labor market, suggesting the economy remained on solid ground despite the signs that market activity was slowing after being temporarily boosted by exports and a build-up of inventories. The trade war between US-China resulted to worsen the situation. Chinese Mobile Giant Huawei is currently facing US sanctions. The cut-off date for the Conference Board survey was on May 16. The US raised existing tariffs on $200 billion in Chinese goods to 25% from 10% on May 10, prompting Beijing to retaliate with its own levies on American imports. Moreover, all 12 of the U.S. Federal Reserve's regional banks supported keeping steady the interest rate commercial banks are charged for emergency loans before the central bank's last policy meeting.
The figure of the Prelim GDP report is expected to sink to 3.1% from 3.2%. Today, the US Richmond Manufacturing Index report is going to be released. The reading might rise to 6 from 3.
Hence, the greenback has got better economic reports in comparison with the Aussie. However, the Australian dollar is likely to regain momentum, but the US dollar has a greater probability to continue the bearish pressure.
Now let us look at the technical view. The price has been struggling at the edge of 0.6930 area carried by the dynamic level of 20 EMA as support indicates further upward momentum. The price without Bearish Divergence in the build may lead to an upward break. The daily close remaining below 0.70 is an indication of the continuation of Bearish bias in the market. It may lead the price towards 0.6500 support area in the coming days.
