AUD/USD – Aussie rebounds after surprise election win for PM Morrison

AUD/USD has started the week with considerable gains. Currently, the pair is trading at 0.6911, up 0.62% on the day. On the release front, there are no data releases out of the U.S. or Australia. Later on Monday, the RBA releases the minutes of the policy meeting earlier this month. On Tuesday, the U.S. posts existing home sales.

Australian employment numbers were mixed last week. The economy created 28.4 thousand jobs in April, marking a 3-month high and crushing the estimate of 15.2 thousand. However, the unemployment rate climbed to 5.2%, higher than the estimate of 5.0%. This is the highest level since August. Meanwhile, wage growth has remained fairly steady. Wage price index remained pegged at 0.5% for a second straight quarter. The key indicator has posted gains of 0.5% or 0.6% since the last quarter of 2016.

The Australian general election was a shocker, as Prime Minister Scott Morrison’s conservatives had been widely expected to lose to the center-left Liberals. Morrison had trailed badly in the polls throughout the campaign, but came from behind in stunning fashion to pull off the victory. The markets reacted favorably to the election results, and AUD/USD climbed as high as 1.0% on Monday. The pair is coming off a dismal week, falling 1.9%. This marked its sharpest decline since early February.

Federal Reserve Chair Jerome Powell will speak at an event on Monday, and there are a dozen Fed speakers at various venues during the week. Still, investors don’t expect to hear anything new from the Fed, which has said that the next rate move could be in either direction. The markets have priced in a rate cut later this year, and some analysts are predicting a second rate cut before 2020. This could take dampen enthusiasm for the strong U.S. dollar, as rate cuts would make the greenback less appealing to investors.

Australian & Indian Election results provide risk-on flows on mixed Asian open

AUD/USD Fundamentals

Monday (May 20)

• 13:05 US FOMC Member Clarida Speaks
• 19:00 US Federal Reserve Chair Powell Speaks
• 21:30 RBA Monetary Policy Meeting Minutes

Tuesday (May 21)

• 10:00 US Existing Home Sales. Estimate 5.35M

*All release times are DST

* Key events are in bold

AUD/USD for Monday, May 20, 2019

Open: 0.6868 High: 0.6934 Low: 0.6868 Close: 0.6911

AUD/USD Technical

AUD/USD posted sharp gains in the Asian session. The pair edged higher in European trade but then retracted. AUD/USD has posted small losses early in the North American session.

• 0.6825 is providing support
• 0.6968 is the next resistance line
• Current range: 0.6825 to 0.6968

Further levels in both directions:

• Below: 0.6825, 0.6744 and 0.6686
• Above: 0.6968, 0.7085, 0.7190 and 0.7240

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