AUD/USD Forecast July 15-19

The Australian dollar  pushed  over the  0.93 line, but could not consolidate these  gains, and closed the week virtually unchanged, at 0.9038.  This week’s highlight is the  RBA Monetary Policy Meeting Minutes. Here is an outlook of the events and an updated technical analysis for AUD/USD.

Australian releases hit some turbulence  last week, as Consumer Sentiment and Trade  Balance disappointed. The  Unemployment Rate jumped, and a strong Employment Change  didn’t translate into gains for the AUD/USD. The Aussie did  improve  after the US Federal Reserve  said that  it might not adjust QE  for some time, but  the  currency  failed  to hold onto these  gains.

Updates:

• Chinese GDP rose by 7.5%, as expected, and gave some back wind to the Aussie. Some feared the outcome would be weaker. The Aussie found it hard to hold up, but AUD/USD received a boost from weak US retail sales and is trading around 0.91.
• Forex Analysis: AUD/USD Bias towards Lower Lows
• The meeting minutes of the recent RBA meeting were not too dovish. The expectations for a rate cut in August are now lower. AUD/USD advanced to around 0.92.
• Weak housing data in the US  and the  lack of news from Bernanke in the prepared testimony  pushed the dollar a bit lower. AUD/USD is already at 0.9176.
• AUD/USD breaks resistance as the PBOC removes the lending floor. The pair is above 0.92 once again. Also the kiwi is moving higher, on its way to 0.80.

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

1. New Motor Vehicle Sales: Monday, 1:30. This is an important consumer indicator, as increased  purchases of big-ticket consumer items such as cars and trucks indicates stronger consumer confidence and spending. The indicator has not looked sharp,  having failed to post any gains in  2013. The markets will be hoping that this negative streak ends in the July release.
2. Chinese GDP: Monday, 2:00. Chinese economic growth has slowed down in 2013, and this  has had a major impact on Australia’s export sector. Chinese GDP dropped to 7.7% in the previous release, missing the estimate of 8.0%. The estimate for this month stands at 7.7%. Will the key indicator meet or beat this prediction?
3. RBA Monetary Policy Minutes: Tuesday, 1:30. The RBA has been saying that the Aussie remains overvalued, and if this sentiment is reiterated in the minutes,  we could see a negative reaction from the Australian dollar. Analysts will be combing through the report for details about the RBA’s recent decision to leave interest rates unchanged.
4. MI Leading Index: Wednesday, 00:30. This index is based on 9 economic indicators but is considered a third-tier release, since most of the indicators have been previously released. The index gained 0.6% last month, matching its highest gain in 2013. The markets will be hoping for another healthy gain in the upcoming release.
5. CB Leading Index: Thursday, 00:00. This important release is comprised of 7 economic indicators. The index has posted modest gains for most of 2013, and the June reading came in at 0.3%. Will we see any improvement in July?
6. NAB Quarterly Business Confidence: Thursday, 1:30. This report focuses on business confidence, which is crucial for economic activity and growth. The indicator  jumped to  2 points in Q1  of 2013, indicating improving economic conditions. This was the highest level since Q2 of 2011. Another strong reading would be bullish for the Aussie.

AUD/USD Technical Analysis

AUD/USD  started the week at 0.9043, and  moved steadily higher,  breaking above  the 0.93 line and touching a high of 0.9305. The pair then retracted  sharply,  dropping to a low of  0.8998, as the support level of 0.8993 (discussed  last week) held  firm.  This marked the first time that the pair  has dropped under  the 0.90 level since September 2010.  The pair bounced  back up to close the week at 0.9038.

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

Technical lines from top to bottom:      

We  begin with strong resistance at 0.9634. This line saw some action in May, and the pair has continued to drop sharply since then.

0.9549 is the next line of resistance.  This is followed by 0.9428,  which had a busy month  in  June. Prior to that, this line  had  provided strong support, and had remained intact since October 2011.

0.9283 was briefly breached as the Aussie showed some strength, but couldn’t hold onto these gains. It continues to provide  resistance.  This is followed by resistance at  0.9171.

0.9041  was a reliable support line, but had been weakening as the  Aussie  lost ground. It gave way late in the week, and  is now providing weak resistance. It could see more action early  this week. This is followed by the psychologically important 90 level.

0.8893 was last  breached in August 2010, as the Australian dollar put together a strong  rally which saw it  climb  above the 1.10 line. This is followed by 0.8747, which has remained in place since July 2010.

0.8550 is the next support line. It saw a lot of action in mid-2010 and has remained intact since that time. The final support level for now is 0.8477.

I  continue to be  bearish on AUD/USD.

The Australian dollar did make some gains last week, and briefly pushed above the 0.93 line. However, this was more a result of broad US weakness rather than newfound strength in the Aussie. Australian data has not looked sharp, and with the Australian dollar dipping below the critical 0.90 level for the first time since 2010, there is more room for the currency to fall.

The Aussie sometimes moves in tandem with gold. You can trade binary options on gold using this technical analysis.

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 the Japanese yen, read the USD/JPY forecast.
• For GBP/USD (cable), look into the British Pound forecast.
• For USD/CAD (loonie), check out the Canadian dollar forecast.