AUD/USD was unchanged for a third consecutive week, as the pair closed at 0.9384. This week’s highlights are Building Approvals and PPI. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.
Australian releases were uneventful last week, as CPI matched the forecast. In the US, housing, employment and manufacturing data was excellent, but the greenback failed to take advantage.
[do action=”autoupdate” tag=”AUDUSDUpdate”/]AUD/USD graph with support and resistance lines on it. Click to enlarge:
- HIA New Home Sales: Tuesday, Tentative. New Home Sales tends to show sharp volatility. After a strong gain in April, the May release posted a sharp decline of 4.3%. Will the indicator bounce back in the upcoming release?
- Building Approvals: Thursday, 1:30. This is the first key event of the week. The indicator tends to swing sharply, leading to estimates that are often well off the mark. This was the case last month, as the indicator soared 9.9%, crushing the estimate of 3.1%. The markets are expecting a gain of just 0.2% in the June reading.
- Import Prices: Thursday, 1:30. Import Prices bounced back last month, posting an excellent gain of 3.2%. This easily beat the estimate of 1.9%. The markets are braced for a sharp downturn in June, with the estimate standing at -1.4%.
- AIG Manufacturing Index: Thursday, 23:30. The index has struggled below the 50 line since September, indicative of ongoing contraction in the manufacturing sector. Will the indicator improve and push above 50 in the upcoming release?
- Chinese Manufacturing PMI: Friday, 1:00. Key Chinese data can have a strong impact on the movement of AUD/USD, since China is Australia’s number one trading partner. Manufacturing PMI continues to stay slightly above the 50 line, which separates expansion from contraction. The index improved to 51.0 points last month, matching the forecast. The markets are expecting the upward move to continue, with the estimate standing at 51.4 points.
- PPI: Friday, 1:30. PPI is the primary gauge of inflation in the manufacturing sector. The index jumped 0.9% last month, beating the estimate of 0.6%. Another strong gain is expected, with the estimate standing at 0.7%.
- Chinese HSBC Flash Manufacturing PMI: Friday, 1:45. There was good news from the index last month, as it pushed above the 50-point level for the first time in 2014. The index came in at 50.7 points, close to the estimate of 50 8 points. The estimate for the June release stands at 52.0 points.
- Commodity Prices: Friday, 6:30. Commodity Prices continue to post sharp declines, indicative of weak demand for Australian exports. No significant change is expected in the upcoming release.
*All times are GMT.
AUD/USD Technical Analysis
AUD/USD opened the week at 0.9394 and dropped to a low of 0.9361, as the pair broke below support at 0.9369 (discussed last week). The pair then reversed directions, climbing to a high of 0.9474 late in the week. The pair was unable to consolidate at these levels, and closed the week unchanged at 0.9384.
Technical lines from top to bottom:
We begin 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 was breached but recovered and is a weak resistance line. 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 briefly breached early in the week. It is providing weak support and could see further action early in the 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 often takes its riders on roller coaster rides, but AUD/USD has been unusually subdued, with little movement since early June. Strong US numbers have not translated into gains for the US dollar, as the Aussie continues to trade at high levels. So, it could be another lazy summer week for the pair.
- 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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