AUD/USD continues to struggle, as the pair trades at six-year lows. AUD/USD lost 50 points and closed the week at 0.7370.There are six releases this week. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.
In the US, retail sales was dismal and consumer sentiment fell short of expectations, but the greenback managed to post more gains. Australian Consumer Sentiment posted another decline, and the Chinese trade surplus was smaller than expected. However, Aussie losses were limited as Chinese GDP remained steady.
[do action=”autoupdate” tag=”AUDUSDUpdate”/]AUD/USD graph with support and resistance lines on it. Click to enlarge:
- Monetary Policy Meeting Minutes: Tuesday, 1:30. The RBA will release the minutes from its policy meeting earlier in the month. The RBA did not make any changes to interest rates, and the minutes are unlikely to contain any details that will shake up AUD/USD.
- MI Leading Index: Wednesday, 00:30. This index is based on 9 economic indicators, but is a minor event since most of the data has already been released. The indicator softened in May, with a reading of -0.1%. Will the index bounce back into positive territory in the June report?
- CPI: Wednesday, 1:30. CPI is the primary gauge of consumer inflation, and an unexpected reading can have a strong impact on the movement of AUD/USD. The index remained unchanged in Q1, with a slight gain of 0.2%. The markets are expecting a big surge in the Q2 report, with a forecast of 0.8%. Will the index match or beat this rosy prediction?
- Trimmed Mean CPI: Wednesday, 1:30. This index excludes the most volatile items found in CPI, and thus reduces distortions of the underlying trend. The indicator posted a healthy gain of 0.6% in Q1, matching the estimate. An identical gain is expected in the Q2 report.
- RBA Governor Glenn Stevens Speaks: Wednesday, 3:05. Stevens will speak at an event in Sydney. Analysts will be listening closely, looking for any clues as to the RBA’s plans regarding interest rate policy.
- Chinese Markit Flash Manufacturing PMI: Friday, 1:45. Chinese key indicators can have a significant effect on AUD/USD, as the Asian giant is Australia’s number one trading partner. The index has hovered just below the 50- line, which separates contraction from expansion, since January. Little change is expected in the July reading, with an estimate of 49.8 points.
* All times are GMT.
AUD/USD Technical Analysis
AUD/USD opened the week at 0.7420 and climbed to a high of 0.7489. The pair then reversed directions, touching a low of 0.7349, breaking support at 0.7403 (discussed last week). AUD/USD closed the week at 0.7370.
Live chart of AUD/USD: [do action=”tradingviews” pair=”AUDUSD” interval=”60″/]
Technical lines from top to bottom:
We begin with resistance at 0.7901. This line was an important cap in March.
0.7798 was an important resistance level for much of June.
0.7692 remains a strong resistance line.
0.7602 has some breathing room as the pair trades at low levels.
0.7528 is an immediate resistance line.
0.7403 had been under pressure, and has switched to a resistance role for the first time May 2009.
0.7266 marked a high point for the pair in January 2009.
0.7113 has held firm since April 2009.
0.7011 was a key support level in March 2006.
0.6931 is the final support line for now.
I am bullish on USD/AUD
Recent US data has not impressed, the US dollar continues to hammer away at its Australian counterpart, bolstered by Yellen’s relatively upbeat comments. The continuing monetary divergence between the Fed and the RBA will likely continue to weigh on the slumping Aussie.
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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 the Japanese yen, read the USD/JPY forecast.
- For GBP/USD (cable), look into the British Pound forecast.
- For the Canadian dollar (loonie), check out the Canadian dollar forecast.
- For the kiwi, see the NZDUSD forecast.
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