Category: AUD/USD Forecast

AUD/USD Forecast Mar. 2-6



The Australian dollar posted slight losses last week, as AUD/USD closed at the 0.78 line. The upcoming week is a busy one, with 14 events. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

In Australia, Private Capital Expenditure sputtered with a sharp decline of 2.2%. Over in the US, Janet Yellen’s testimony signaled that a Fed rate hike is not imminent and that wage growth and inflation will need to improve first.

Updates:

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

AUDUSD_Forecast Mar.2-6

  1. AIG Manufacturing Index: Sunday, 22:30. The indicator has posted two straight readings below the 50-point level, which separates expansion from contraction. The January report came in at 49.0 points, the fifth reading below 50 in the post six releases.
  2. MI Inflation Gauge: Sunday, 23:30. This event is published monthly, and helps analysts track CPI, which is released once a quarter. The index has been very steady and posted a weak gain of 0.1% in the previous reading.
  3. HIA New H0me Sales: Monday, 00:00. This minor indicator helps gauge the strength of the housing sector. The indicator posted a decline of 1.9% in January, its first decline since July.
  4. Company Operating Profits: Monday, 00:30. Company Operating Profits provides a snapshot of the strength of the business sector, which is an important engine of economic growth. The indicator is released each quarter. In Q3, the indicator bounced back with a gain of 0.5%, well above the estimate of -1.2%. The forecast for Q4 stands at 0.7%.
  5. Commodity Prices: Monday, 5:30. This indicator continues to post sharp declines, as the Australian export sector struggles with a global slowdown and weakness in China. The January release came in at -20.4%. No significant change is expected in the upcoming release.
  6. Building Approvals: Tuesday, 00:30. Building Approvals tends to show strong fluctuation, and results in estimates which are often well off the mark. The indicator posted a decline of 3.3%, better than the estimate of -4.8%. Another decline is expected in the January report, with an estimate of -1.8%.
  7. Current Account: Tuesday, 00:30. Current Account is closely linked to currency demand, as foreigners must purchase Australian goods and services with Australian dollars.
  8. Cash Rate: Tuesday, 3:30. The RBA surprised with a rate cut in February, lowering the rate from 2.50% to 2.25%. The markets are expecting another cut to 2.00%, and if this does occur, we could see the Aussie lose ground.
  9. AIG Services Index: Tuesday, 22:30. The index continues to post readings below the 50-point level, which points to ongoing contraction in the services sector. However, the index has been moving higher, and reached 49.9 points in the January report. Will the indicator push above 50 in the February reading?
  10. GDP: Wednesday, 00:30. This is the major event of the week and should be treated as a market-mover by traders. GDP has been on a downward trend, and slipped to 0.3% in Q3, well short of the estimate of 0.7%. The markets are expecting a turnaround in the Q4 report, with an estimate of 0.7%. Will the indicator meet or beat this rosy prediction?
  11. Retail Sales: Thursday, 00:30. Retail Sales is the primary gauge of consumer sales. The indicator dipped to 0.2%, within expectations. The markets are anticipating better news in the January release, with an estimate of 0.4%.
  12. Trade Balance: Thursday, 00:30. Trade Balance is closely linked to currency demand and can have a significant impact on the direction of AUD/USD. The trade deficit has been falling sharply in recent readings and dropped to A$-0.44 billion, much lower than the forecast of A$-0.85 billion. However, the deficit is expected to climb to A$-0.93 billion in the January report.
  13. RBA Deputy Governor Philip Lowe Speaks: Thursday, 1:30. Lowe will speak at a conference in Sydney. A speech which is more hawkish than expected is bullish for the Australian dollar.
  14. AIG Construction Index: Thursday, 22:30. This minor indicator has been producing recent readings in the mid-40s, indicative of contraction in the construction sector. No major change is expected in the upcoming release.

* All times are GMT.

AUD/USD Technical Analysis

AUD/USD started the week at 0.7844 and dropped to a low of 0.7739. The pair then reversed directions and touched a high of 0.7913, testing resistance at 0.7904 (discussed last week). The pair closed at 0.7799.

Live chart of AUD/USD:


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 was tested as the pair posted strong gains late in the week before retracting. It is an immediate resistance line.

0.7799 continues to see action. The pair closed the week at this line.

0.7601 is the next support level.

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 am bearish on AUD/USD.

With a host of Australian data, we can expect some movement from AUD/USD during the week. If the RBA reduces rates, we could see the Aussie lose ground. In the US, Fed chair Yellen tried to dampen expectations about a mid-rate hike in her Congressional testimony, but a strong NFP could boost the June rate expectations.

Further reading:

AUD/USD Forecast Feb. 23-27

AUD/USD Forecast Feb. 23-27

The Australian dollar posted modest gains last week, as AUD/USD closed at 0.7836. This week’s key event is Private Capital Expenditure. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD. The RBA minutes reiterated concern about the health of the Australian economy. In the US, the Fed minutes were dovish in

AUD/USD Forecast Feb. 16-20

AUD/USD Forecast Feb. 16-20

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AUD/USD Forecast Feb. 9-13

AUD/USD Forecast Feb. 9-13

The Australian dollar stabilized last week and closed unchanged at 0.7789. This week’s highlights are NAB Business Confidence and Employment Change. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD. The RBA shocked the markets with a rate cut, lower the benchmark rate from 2.50% to 2.25%. The Australian dollar dropped

AUD/USD Forecast Feb. 2-6

AUD/USD Forecast Feb. 2-6

The Australian dollar’s sharp slide continues, as AUD/USD lost over 100 points last week. The pair closed at 0.7754, its lowest level since July 2009. The upcoming week is busy, with 12 events. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD. In the US, the Fed did not make any major changes in its statement, but did marginally

AUD/USD Forecast January 26-30 2015

AUD/USD Forecast January 26-30 2015

AUD/USD tumbled over 300 points last week, as the pair closed below the 0.80 line, its lowest level since July 2009. This week’s highlights include NAB Business Confidence, CPI and PPI. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD. With the currency markets in disarray following the SNB shocker and

AUD/USD Forecast January 19-23 2015

AUD/USD Forecast January 19-23 2015

AUD/USD lost ground during the week but recovered, ending the week almost unchanged. AUD/USD closed just above the 0.82 line. The upcoming week has just five releases. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD. Australian job numbers were excellent, with impressive readings from Employment Change and the unemployment

AUD/USD Forecast Jan. 12-16 2015

AUD/USD Forecast Jan. 12-16 2015

AUD/USD enjoyed its best week since March, as the pair climbed over 100 points. AUD/USD closed just under the 0.82 line. This week’s highlight is Employment Change. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD. In the US, employment data was solid, as Nonfarm Payrolls was higher than expected,

AUD/USD Forecast Jan. 5-9 2015

AUD/USD Forecast Jan. 5-9 2015

AUD/USD showed some strength during the week but gave up those gains on Friday. The pair closed the week almost unchanged at 0.8077. This week’s highlights include Retail Sales and Building Approvals. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD. In the US, key data was on the weak side, as Unemployment

AUD/USD Forecast Dec. 29 – Jan. 2

AUD/USD Forecast Dec. 29 – Jan. 2

The Australian dollar held its own against the strong US dollar last week, as AUD/USD closed the week at 0.8120. The final week of the year has only two releases. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD. In the US, Final GDP for Q3 was excellent, with a rate of 5% annualized