AUD/USD Bears Back in Business as RBA Set to Leave Cash Rate Unchanged

United States – Institute for Supply Management (ISM) Manufacturing PMI

Today, at GMT 2:00 p.m., the Institute for Supply Management will release its manufacturing PMI figure for the United States. The ISM’s US manufacturing PMI measures the level of a diffusion index based on a survey of 400 purchasing managers.

Purchasing managers in the United States are involved in the supply side of the economy. As most companies reduce their expenses and production based on their sales forecast, the survey of purchasing managers reveals the overall optimism of various companies in the country. Hence, binary options investors can easily figure out the sentiment regarding the economic condition in the country from the ISM manufacturing PMI readings.

Last month, the ISM manufacturing PMI for the United States came out at 58.8 and the forecast for this month is set at 57.9.

Australia – Cash Rate

Tomorrow, at GMT 3:30 a.m., the Reserve Bank of Australia (RBA) released the official cash rate, which is the interest rate that major Australian banks and financial institutions pay to borrow funds held at the RBA.

Since short-term interest rates are the primary factor in the valuation of the Australian Dollar against other major currencies, Binary options traders pay close attention to any changes in the official cash rate.

The RBA left the cash rate at 1.5% in their last meeting and the forecast for this month is that the RBA will leave the cash rate unchanged at 1.5% for the time being.

AUD/USD Forecast

Since breaking below the uptrend line on September 18, the AUD/USD turned very bearish and the price fell by around 200 pips over the last two weeks. However, as soon as the pair reached near the 0.7830 level, it found a strong support. Although the AUD/USD penetrated below this support level last week, so far, it has failed to close below it.

As the Reserve Bank of Australia is expected to leave their overnight cash rate at 1.5% for the time being, but the US ISM manufacturing PMI reading is estimated to come out at 57.9, we believe it would likely set a bearish fundamental outlook for the AUD/USD this week, Therefore, if the AUD/USD closes below the support level near 0.7830, it would likely attract additional bearish momentum in the market.

Hence, Australian binary options traders should look out for trading opportunities below this major support level around 0.7830.

Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes on various tech and financial topics. You can reach him at contact@asifimtiaz.com

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Asif Imtiaz

Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes on various tech and financial topics. You can reach him at contact@asifimtiaz.com

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