Fundamental Analysis of AUD/USD for January 30, 2019

AUD/USD is currently consolidating at the edge of 0.7200 while USD has been weighed down by the government shutdown and weak economic reports ahead of the FOMC Statement, Federal Funds Rate decision, and NFP reports this week.

The Federal Open Market Committee is ending its two-day policy meeting. Today the FOMC is due to announce a decision on the Federal Funds Rate which is expected to be unchanged at 2.50%. US Federal Reserve Chairman Jerome Powell has been quite hawkish about monetary tightening since he took the chair after Yellen. However, there is a slim chance that the central bank will raise interest rates this year that might take the benchmark rate to 3.00% by the end of 2019. Apart from the FED, the US economy has been hurt by the government shutdown which is to blame for a slowdown in the overall economic growth in the US. According to Investors Service, another government shutdown may pose a greater threat to the domestic economy. Additionally, today US ADP Non-Farm Employment Change report is going to be published which is expected to decrease to 180k from the previous figure of 271k and Pending Home Sales is expected to increase to 0.8% from the previous negative value of -0.7%.

On the AUD side, Today Australia released a CPI report where consumer inflation edged up to 0.5% in Q4 on a quarterly basis which was expected to be unchanged at 0.4% and Trimmed Mean CPI remained flat at 0.4% as expected. After being dominated by the USD since February 2018, AUD is gradually regaining momentum ahead of the election in 2019. The Morrison government is expected to promise tax cuts and optimistic economic developments in the Final Budget of April which could prop up AUD gains.

Meanwhile, USD has been weighed down by the prolonged government shutdown and weak economic reports from the US. To make things worse, analysts have gloomy expectations for upcoming reports. Until the US federal government settles up the gridlock between the US President and Congress or provides upbeat economic data, AUD is going to sustain the bullish momentum in the pair.

Now let us look at the technical view. The price is currently trading at the edge of 0.7200 resistance area from where a daily close above the area could extend bullish momentum towards 0.7400 area. Otherwise, a bullish rejection off the 0.7200 area with certain bearish pressure is expected to keep the price pushing lower. As the price remains above 0.7000 area with a daily close, the bullish bias is expected to continue further.

SUPPORT: 0.7000-50

RESISTANCE: 0.7200, 0.7400

BIAS: BULLISH

MOMENTUM: VOLATILE