AUDUSD shows continued upside momentum

The pair is on its way to test Sept highs after a classic pattern breakout.


The US Dollar was bearish against most of its major pairs on Friday with the exception of the AUD. On Monday, no major economic data is expected.        

The Euro was bullish against most of its major pairs with the exception of the CHF. In Europe, German September industrial production only rose 1.6% on month while +2.5% was expected, August figures have been revised lower from +0.5% to +0.2%.

The Australian dollar was bearish against all of its major pairs.

Regarding the week's U.S. economic data front:

Looking at jobs data, Initial Jobless Claims dropped to 751K for the week ending October 31st (735K expected), from a revised 758K in the week before. Continuing Claims fell to 7,285K for the week ending October 24th (7,200K expected), from a revised 7,823K in the prior week. The Change in Nonfarm Payrolls fell to 638K on month in October (580K expected), from a revised 672K in September. The Unemployment Rate cdropped to 6.9% on month in October (7.6% expected), from 7.9% in September. Automatic Data Processing's Employment Change showed that 365K jobs were added on month in October (643K expected), compared to a revised 753K jobs added in September.

Wholesale Inventories rose 0.4% on month in the September final reading (-0.1% expected), from -0.1% in the September preliminary reading. Factory Orders increased 1.1% on month in September (+1.0% expected), compared to a revised +0.6% in August. Durable Goods Orders rose 1.9% on month in the September final reading (as expected), in line with the September preliminary reading. Markit's US Manufacturing Purchasing Managers' Index slightly rose to 53.4 on month in the October final reading (53.3 expected), from 53.3 in the October preliminary reading. Construction Spending increased 0.3% on month in September (+1.0% expected), compared to +1.4% in August. 

The Federal Open Market Committee (FOMC) kept the Federal Funds Target Rate between 0.00% and 0.25%, as expected. 

The Mortgage Bankers Association's Mortgage Applications rose 3.8% for the week ending October 30th, compared to +1.7% in the previous week.  

The Trade Deficit shrank to 63.9 billion dollars on month in September (as expected), from a revised 67.0 billion dollars in August. 

Looking at the week's largest gainer, the AUD/USD comes out on top with a gain of 3.43% or 241 pips after confirming a key breakout. The pair has continued to show upside momentum after breaking above a declining trend channel and a falling wedge reversal pattern. As long as 0.715 can hold as support, look for a continuation higher to test recent highs near the 0.742 level posted back in September and the uptrend to continue higher. A break below 0.715 support would invalidate the pattern breakout and put pressure on the pair down to 0.699 support.

Source: GAIN Capital, TradingView

Have a great weekend

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