AUD/USD Forecast – December 7-11

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The Aussie enjoyed a rate hike but couldn’t stand against the excellent Non-Farm Payrolls in the US. The upcoming week allows the Aussie to retaliate with its own employment figures. Looking at the previous month, they should be good. There are 10 other events that will impact the Aussie. Here’s an outlook for the upcoming week in Australia, and an updated technical analysis for AUD/USD.

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

Apart from the official employment figures, note the unofficial early indication that comes from the ANZ Job Advertisements. Home Loans and a speech from Glenn Stevens will also move the Aussie, after the recent rate hike. Let’s see the events. The technical analysis will follow:

1. AIG Construction Index: The Australian Industry Group releases this indicator, similar to PMI figures, on Sunday at 22:30 GMT. The construction index has been above 50, expressing optimism, in the past two months. It’s expected to edge up beyond last month’s 50.9 points.
2. ANZ Job Advertisements: Contrary to the recent employment figures, this indicator fell last month by 1.7%, after neat rises. The number of jobs advertised in newspapers will be closely followed since it’s published before the official employment numbers. A rise is expected this time. Published on Monday at 00:30 GMT.
3. Current Account: Australia’s deficit has widened in recent months, mainly due to a stall in commodity prices. Current Account is expected to show a deficit of 16.7 billion, more than last month’s wide deficit of 13.3 billion. This figure is published rather late – 2 months after the month ended. Published on Tuesday at 00:30 GMT.
4. NAB Business Confidence: Overshadowed by the Current Account release, this number is expected to be positive, as it has been in the past 5 months. 350 leading business have expressed improving conditions, as reflected in other Australian numbers. Published on Tuesday at 00:30 GMT.
5. Glenn Stevens talks: The rate statement that accompanied the rate hike last month didn’t include too many hints about the future policy in 2010. We’ll get a chance for hints in a speech due by RBA governor Glenn Stevens on Tuesday at 8:15 GMT, as he talks in Sydney.
6. Westpac Consumer Sentiment: 1200 consumers are surveyed for this survey by the Westpac Banking Corporation. The sentiment for consumer spending has fallen last month by 2.5% following 5 months of positive data. It’s expected to return growing this time. Published on Tuesday at 23:30 GMT.
7. Home Loans: This is an excellent indicator for the housing sector and for the whole economy. The number of loans, or financed houses if you wish, surprised with a leap of 5.1% last month, following two months of drops. They’re expected to fall by 1.8% this time, but a positive sure is possible. Published on Wednesday at 00:30 GMT, together with the trade balance.
8. Trade Balance: The goods part of the current account is published ahead of the current account – a month earlier. This more fresh figure surprised last month with a smaller than expected deficit of 1.85 billion. The deficit is predicted to squeeze down to 1.78 billion this time. Published on Wednesday at 00:30 GMT.
9. MI Inflation Expectations: The Melbourne Institute publishes inflation expectations before the official consumer price index is released, thus making this figure important. Price rises aren’t accelerating in Australia. They don’t add pressure for further rate hikes. Inflation expectations have fallen to 3.2% last month after two months at 3.5%. Another 3.2% result is predicted now. Published on Thursday at midnight.
10. Employment figures: After a good surprise last month, Australian employment is expected to remain rather stable. 5.3K jobs are expected to be added. This Employment Change rise is modest in comparison to last month’s 24.5K rise, and 40.6 in the previous month. At least expectations have been modified to the good situation. Beforehand, economists were predicting falls in employment. Regarding the Unemployment Rate, expectations are for a rise from 5.8% to 5.9%. Note that also here, economists have already expected a rise to 6% in the past, and were “disappointed”. These very important figures are published on Thursday at 00:30 GMT.
11. Guy Debelle talks: RBA Assistant Governor Guy Debelle will speak in Sydney on Thursday at 1:45 GMT, and might add to the words of his boss earlier this week. In his previous public appearances, he didn’t make any stunning announcements, but he could do it now.
12. Chinese Industrial Production: This is the most important Chinese figure that is due on Friday, at 2:00 GMT. Year over year industrial production is expected to rise by 18.2%, after a 16.1% rise last month. The Australian economy is quite dependent on the Chinese one. A stronger result will help the Aussie.

AUD/USD Technical Analysis

The Aussie began the week by gradually climbing to the 0.9322 resistance line and bouncing off this point. AUD/USD traded in a range with 0.9210 as the support line, but on Friday it fell to 0.9100 before closing at 0.9142.

Most resistance lines haven’t changed from last week’s outlook. The week’s range lines, 0.9210 and 0.9322 both serve as resistance lines, with 0.9322 being a major resistance line.  Further above, 0.94 was the year-to-date high and is now the upper frontier.

Looking down, major support appears at 0.8950, which was a significant line in recent months, and also beforehand. The Aussie bounced off this line during October.

Below that, 0.85 capped the Aussie during the summer, and is distant support line that will come into action if the greenback continues climbing.

My sentiment remains bullish on AUD/USD.

Australia just enjoyed another rate hike, and the strong employment figures in the US should be followed by strong Australian employment figures that will boost the Aussie.

Further reading:

• For a broad view of all the week’s major event in all currencies, read the forex weekly outlook.
• For the Euro, read the EUR USD Forecast.
• For GBP/USD, look into the British Pound forecast.
• For the Australian dollar, read the AUD/USD forecast.
• For USD/CAD, check out the Canadian dollar forecast.

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