AUD/USD Forecast Dec. 9-13

AUD/USD  briefly dropped below the key 0.90 level, but bounced back to close the week almost unchanged at the 0.91 line. This week’s major events include NAB Business  Confidence and Employment Change.  Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

Australian data was mixed, as Building  Approvals declined while Retail Sales beat the estimate.  Over in the US, employment numbers looked sharp. Unemployment Claims continued to drop, while Non-Farm Payrolls remained solid and easily beat the estimate.

AUD/USD graph with support and resistance lines on it. Click to enlarge:    

1. Chinese Trade Balance: Sunday, 3:01.  Chinese Trade Balance started the week off on a bright note, as the November trade surplus widened to 33.8 billion dollars, crushing the  estimate of 21.3. Key Chinese events can have a strong impact on the movement of AUD/USD, since China is Australia’s number one trading partner.
2. ANZ Job  Advertisements: Monday, 00:30. This employment indicator has not looked strong, with just one gain in the past eight releases. The October release dropped by 0.1%, and the markets are hoping for better news in November.
3. Chinese CPI: Monday, 1:30. This key inflation index climbed 3.2% in October, an eight-month high. The markets are expecting another strong reading in November, with an estimate of 3.0%.
4. NAB Business Confidence: Tuesday, 00:30. This is a key event which can affect the direction of AUD/USD. The indicator took a tumble last month, dropping to 5 points from  12 in the previous release. The markets will be looking for better news from the upcoming release.
5. Home Loans: Tuesday, 00:30. Home Loans is a important gauge of demand and activity in the housing industry. The indicator jumped 4.4% in October, beating the estimate of 3.6%. The markets are expecting a smaller gain this time around, with the estimate standing at 1.3%.
6. Chinese Industrial Production: Tuesday, 5:30.  This indicator has been quite steady, and posted a gain of 10.3% last month. More of the same is expected in November, with an estimate of 10.2%.
7. Westpac Consumer Sentiment: Tuesday, 23:30. Consumer Confidence is an important indicator, as an increase in consumer confidence usually leads to stronger consumer spending, which is critical for economic growth. The indicator posted a respectable gain of 1.9% last month and the markets are hoping for another solid gain in  November.
8. MI Inflation Expectations: Thursday, 00:00. This indicator, which measures consumer expectations of inflation, helps analysts track actual inflation trends. The indicator posted an increase of 1.9% last month, little changed from the previous release.
9. Employment Change: Thursday, 00:30. One of the most important economic indicators, employment change often has a major impact on AUD/USD. The indicator has missed the estimate for four straight releases. Last month, the indicator posted a weak gain of 1.1 thousand, well off the estimate of 10.3 thousand. The estimate for November remains pegged at 10.3 –  will the indicator be able to beat this prediction? The Unemployment Rate, which stands at 5.7%, is expected to edge up to 5.8%.

*All times are GMT

AUD/USD Technical Analysis

AUD/USD started the week at 0.9120 and  quickly hit the week’s  high of 0.9168, as resistance at 0.9180 (discussed last week) held firm.  Late in the week, the pair dipped below the 0.90 line, touching a low of 0.8986. AUD/USD recovered and closed the week at 0.9101.

Live chart of AUD/USD: [do action=”tradingviews” pair=”AUDUSD” interval=”60″/]

Technical lines from top to bottom:

We begin with resistance at 0.9556. Next, 0.9428 was busy in the first half of October and is currently providing strong resistance.

0.9283 saw a lot of action in the months of June and July, alternating between resistance and support roles. It has provided steady support since mid-September.

0.9180 saw action for the second straight week, and held firm as the pair moved higher early in the week  . It starts off the week as a weak line and could be tested if the US dollar shows any upward movement.

Next is the round number of 0.9000, which  was breached late in the week,. The line had held firm since September,  when the Australian dollar started a strong rally which saw it break past the 0.95 line.

0.8893 has been a strong support line since August 2010, when the Australian dollar put together a strong rally which saw it climb above the 1.10 line.

0.8728 was last breached in July 2010, when the Australian dollar began an extended rally that saw it climb close to the 1.10 line.

The final line for now is 0.8578, which was busy in September 2008, at which time the Aussie was in a steep spiral that saw it fall all the way to the 0.60 line.

I am bearish on AUD/USD.

The RBA  did not reduce  interest  rates,  but continues to say that it wants to see a weaker Australian dollar. With sharp US employment numbers last week, led by Non-Farm Payrolls, speculation of a December is growing, which could help the US dollar, as a QE scale down is a US dollar-positive event.

• For a broad view of all the week’s major events worldwide, read the USD outlook.
• For EUR/USD, check out the Euro to Dollar forecast.
• For the Japanese yen, read the USD/JPY forecast.
• For GBP/USD (cable), look into the British Pound forecast.
• For the Australian dollar (Aussie), check out the AUD to USD forecast.
• USD/CAD (loonie), check out the Canadian dollar.