AUD/USD was unchanged for a second straight week, as the pair closed at 0.9382. This week’s highlight is CPI. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.
Australian data was uneventful last week. The RBA minutes indicated that policymakers continue to be concerned about the high value of the Australian dollar, which the RBA says has hampered balanced growth of the economy. In the US, Janet Yellen testified on Capitol Hill, hinting that a rate hike could come earlier if inflation and employment numbers improve faster than expected. US housing and consumer confidence numbers were weak, while Unemployment Claims impressed.
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AUD/USD graph with support and resistance lines on it. Click to enlarge:
- RBA Assistant Governor Guy Debelle Speaks: Monday, 23:25. Debelle will address a conference in Sydney. A speech that is more hawkish than expected is bullish for the Australian dollar.
- RBA Governor Glenn Stevens Speaks: Tuesday, 3:00. Stevens will deliver remarks at an event in Sydney. A speech which is more hawkish than expected is bullish for the Australian dollar.
- CPI: Wednesday, 1:30. CPI, released each quarter, is the primary gauge of consumer inflation. The index has been losing ground and dipped to 0.6% in Q1. The downward trend is expected to continue, with an estimate of 0.5% for Q2.
- Trimmed Mean CPI: Wednesday, 1:30. This index excludes the most volatile items which are found in CPI, such as automobile sales. The index fell to 0.5% in Q1, short of the estimate of 0.7%. The markets are expecting a turnaround, with an estimate of a 0.8% gain in Q2.
- Chinese HSBC Flash Manufacturing PMI: Thursday, 1:45. Key Chinese data can have a strong impact on the movement of AUD/USD, since China is Australia’s number one trading partner. The PMI pushed above the 50-point level last month for the first time this year. The 50-point threshold is a separator between expansion and contraction.
*All times are GMT.
AUD/USD Technical Analysis
AUD/USD opened the week at 0.9382 and dropped to a low of 0.9330, as support at 0.9282 (discussed last week) held firm. The pair then reversed directions, climbing to a high of 0.9411. The pair closed the week unchanged at 0.9382.
Technical lines from top to bottom:
We start with resistance at 0.9910, which has remained firm since last May.
0.9757 marked the start of a rally by the US dollar back in October 2013, which saw the pair drop as low as 0.8650.
This is followed by the round number of 0.9700, which has held firm since October 2013.
0.9526 provided key resistance in November 2013 and has remained intact since that time.
0.9441 held firm for the first time in three weeks. This line marked the high point of the pair in November, which saw the Aussie go on a sharp slide and drop below the 0.89 line.
0.9369 was breached early last week but recovered and is a weak support level. It could see action early this week.
0.9282 remains a strong support level. 0.9175 is next.
The round number of 0.9000 is a key psychological level. It has remained intact since early March.
The final support line for now is 0.8891. AUD/USD broke above this line in February and it has provided strong support since then.
I remain neutral on AUD/USD.
The Australian dollar has had an uneventful summer as AUD/USD continues to trade at high levels. The RBA continues to complain about the currency’s high value, but is clearly not willing to back up its criticism with a rate reduction, so these comments have not had much effect on the Aussie. US employment numbers continue to impress and the markets will be looking for a rate hike sometime after QE winds up, which will likely be in October, if there are no negative surprises from the US economy.
- 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.
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