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AUD/USD Forecast 2 May 2016

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AUD/USD Forecast May 2, 2016
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ISM Manufacturing PMI will determine the dynamics of AUD/USD today

The Aussie significantly weakened against the US dollar last week. Inflation came out significantly below expectations, 1.3% vs. 1.8%.

In this case, the decision of the Reserve Bank of Australia takes on new meaning. Such dynamics of the indicator gives reason to believe that the regulator may cut the rate.

However, if we consider the April meeting, it can be assumed that the RBA is not ready to soften the monetary policy. The only thing which concerns the RBA is the growth of the Aussie, which can slightly complicate the process of economic recovery. Most likely, we won’t see the rate cut at the next meeting.

Today, it is worth to pay attention to the ISM index of business activity in the manufacturing sector.

How to trade

It is possible that the pair AUD/USD will attempt to return to the area of 0.7750. However, even a small hint of the deterioration of the economy and, consequently, a possible rate cut in the near future may be sufficient to support the pair to 0.7400. Today we would buy call options if the pair rises above 0.7633. We would buy put binary options if the pair falls below 0.7590.

Expiry time: 20:00 GMT

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. He has no business nor personal relationships with any mentioned government entities or stocks. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion.

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