AUD/USD May Turn Bullish if Australian Private Sector Credit Continue to Expand

Australia – Private Sector Credit

On Thursday, at GMT 1:30 a.m., the Reserve Bank of Australia will release the month-over-month Private Sector Credit data, which measures the changes in the total value of new credit issued to consumers and corporations in the country over the previous month.

Binary options traders consider the private sector credit to be an important fundamental indicator of the Australian economy as borrowing and spending are highly correlated. Consumers and businesses only take out credit when they feel confident about their ability to pay it back in the future. Hence, it also acts as a measure of consumer and business confidence.

Last month, the private sector credit in Australia increased by 0.6% and the forecast for this month is currently set at an increase of 0.5%.

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

On Friday, 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 56.3 and the forecast for this month is set at 56.5.

AUD/USD Forecast

After remaining highly bullish since the beginning of May and climbing close to 700 pips, the AUD/USD traded sideways over the last few weeks. Last week, the pair found support near the 0.7830 level, then promptly went up to the resistance near 0.7960. Since then, it has failed to close above the 0.7960 level and currently, trading just below it.

Although the ISM Manufacturing PMI reading is estimated to increase to 56.5, the Australian private sector credit has been growing steadily over the last few months and it is once again expected to increase by 0.5% during the last month. We believe it would set a bullish fundamental outlook for the AUD/USD this week. Therefore, if the AUD/USD breaks and closes above the 0.7960 level, it would likely attract additional bullish momentum in the market.

Hence, US binary options traders should look out for trading opportunities above this major resistance level around 0.7960.

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