The Australian dollar remained unchanged for a second straight week, as AUD/USD closed at 0.7758. There are only four events this week. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.
In the US, key numbers disappointed last week. Jobless claims jumped above the 300 thousand level and retail sales and consumer confidence softened. In Australia, RBA Governor Glenn Stevens said that growth will remain low, and dismal employment numbers weighed on the Aussie.
[do action=”autoupdate” tag=”USDJPYUpdate”/]AUD/USD graph with support and resistance lines on it. Click to enlarge:
- New Motor Vehicle Sales: Monday, 00:30. This is an important indicator of consumer spending, which plays a critical role in economic growth. The indicator has been alternating between gains and declines, and posted a strong gain of 3.0% in December. Will the indicator remain in positive territory in the upcoming release?
- RBA Monetary Policy Meeting Minutes: Tuesday, 00:30. This is the key event of the week. The minutes provide a detailed account of the RBA’s policy meeting earlier in February. At that meeting, the RBA stunned the markets with a rate reduction, so the markets will be carefully reviewing the Bank’s reasons for the rate cut.
- CB Leading Index: Tuesday, 23:00. This is a minor event, as most of the data has already been released. The index has struggled, posting four straight declines prior to the November reading, which came in at 0.1%.
- MI Leading Index: Tuesday, 23:30. This indicator has also looked weak in recent readings, and posted a flat reading of 0.0% in December. Will the index push into positive territory in the upcoming release?
* All times are GMT.
AUD/USD Technical Analysis
AUD/USD started the week at 0.7767 and climbed to a high of 0.7843, testing resistance at 0.7843 (discussed last week). The pair then reversed directions, dropping to a low of 0.7641, before rebounding to close at 0.7758.
Live chart of AUD/USD: [do action=”tradingviews” pair=”AUDUSD” interval=”60″/]
Technical lines from top to bottom:
We start with resistance at 0.8313. This line has held firm since mid-December.
0.8150 is the next resistance line.
0.7978 was an important cap in January 2007.
0.7904 has provided resistance since late January.
0.7799 was tested for a second straight week and remains a weak resistance line. It could continue to see action early in the week.
0.7601 held steady as the pair dropped sharply late in the week before recovering.
0.7403 has held firm since May 2009. At that time, the Aussie was in the midst of a rally which saw it climb above the 0.94 line.
The final support line for now is 0.7283.
I remain bearish on AUD/USD.
The RBA recently cut interest rates and remains bearish on the Australian economy, so the Aussie could lose more ground. Monetary divergence continues to weigh on the Australian dollar. We could see some movement from the pair after the release of the Fed minutes.
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Further reading:
- 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 GBP/USD (cable), look into the British Pound forecast.
- For the Japanese yen, read the USD/JPY forecast.
- For USD/CAD (loonie), check out the Canadian dollar forecast.
- For the kiwi, see the NZDUSD forecast.
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