AUD/USD Forecast Dec. 10-14

AUD/USD continued to trade in a narrow range, and closed up slightly  at 1.0484. The upcoming week has  nine events. Here is an outlook of the Australian events, and an updated technical analysis for AUD/USD.

The pair was very steady despite the  numerous Australian releases last week. Building Approvals was very weak, but the employment numbers were strong. The RBA cuts interest rates to an even 3.0%, but this move was priced in by the markets.

Updates: Chinese CPI rose 2.0%, just under the forecast of 2.1%. The Chinese Trade Balance surplus plunged in November, dropping to 19.6 billion. The estimate stood at 26.7B. Australian Home Loans posted a negligible gain of 0.1%. This was well below the forecast of a 3.1% gain. NAB Business Confidence plummeted to -9 points, its lowest level in over three years. Consumer Sentiment will be   released later on Tuesday. The aussie continues to edge higher, and is testing the 1.05 line. AUD/USD was trading at 1.0496. Westpac Consumer Sentiment dropped by 4.1%, its sharpest decline in 2012. RBA Governor Glenn Stevens spoke at a   Bank of Thailand event in Bangkok. MI Inflation Expectations was lower, posting a gain of 1.8%.. New Motor Vehicle Sales came in at a flat 0.0%. AUD/USD is steady, and was trading 1.0553.

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

1. Chinese CPI: Sunday, 1:30. Chinese CPI was unexpectedly low last month, climbing 1.7%. The forecast for December calls for higher inflation of 2.0%.
2. Home Loans: Monday, 00:30. Home Loans posted a 0.9% gain in the previous reading. The markets are predicting a very strong  December release, with an estimate of a 3.1% gain. Will the indicator meet or beat this month’s rosy prediction?
3. Chinese Trade Balance: Monday, Tentative. Chinese Trade Balance surprised the markets last month, posting its highest surplus in almost three years. The markets are forecasting a lower surplus of 26.7 billion for the December reading. Traders should pay close attention to Chinese key releases, as China is Australia’s number one trading partner.
4. NAB Business Confidence: Tuesday, 00:30. Business Confidence has been shaky in recent months, as the indicator has failed to push above the zero level since August. The markets will be hoping for an improvement in the December release.
5. Westpac Consumer Sentiment: Tuesday, 23:30.   Consumer Sentiment tends to be volatile, ,making accurate market forecasts a tricky task. The indicator jumped 5.2% last month, its largest gain in over a year. The markets will be hoping for another strong reading in the December release.
6. RBA Governor Glenn Stevens Speaks: Wednesday, 4:30. Governor Stevens will be  delivering remarks at the Bank of Thailand in Bangkok.  Analysts will be looking for hints as to the RBA’s future monetary policy.
7. MI Inflation Expectations: Thursday, 00:00. Analysts use this inflation indicator to help predict actual inflation figures. In November, the indicator posted its lowest reading of 2012, at 2.2%.
8. New Motor Vehicle Sales: Thursday, 00:30. This indicator tends to be marked by volatility. The previous reading was one of this year’s lowest, with a decline of 2.8%. Will the indicator rebound in the December reading?
9. Chinese Flash Manufacturing PMI: Friday, 1:45.  This key indicator pushed over the 50 point level last month, for the first  time  in over a year.    Will the December reading  continue to  point to expansion in the Chinese manufacturing sector?

* All times are GMT

AUD/USD Technical Analysis

AUD/USD opened at 1.0425, and fell below 1.04, touching a low of 1.0393. The pair pushed as high as 1.0515, briefly breaking resistance at 1.0508 (discussed last week). AUD/USD closed the week at 1.0424.

We  start with resistance at 1.1012. This line has held firm since August 2011. Next is the line at 1.0874. We next encounter resistance at 1.0718, which has not been tested since March. Below, there is strong resistance at 1.0605, just above the round figure of 1.06. This is followed by resistance at 1.0508 a line which had held firm since September. The pair briefly pushed above this line before retracting at the end of the week.

AUD/USD continues to receive support at 1.0402. The pair broke through this line early in the week, but then bounced back. Next,  1.0326 saw a lot of activity in November. This is followed by support at 1.0230. Below, there is support at 1.0174, which has held firm since early October.

This is followed by 1.0080, which is protecting the psychologically important parity level. The parity line, last tested in June, is the next line of support. We next encounter support at 0.9917. The final support line for now is 0.9815, which has held firm since June.

I am bullish on AUD/USD.

Although the AUD/USD has been marked by range trading for the past month, traders should bear in mind that the aussie has  done well,  having gained around three cents against the greenback since early October. The looming fiscal crisis in the US will likely impact on the movement of the pair. On the assumption that US lawmakers will hammer out some kind of compromise, market sentiment would be positive, and this would likely increase the demand for riskier currencies like the Australian dollar.

The Aussie sometimes moves in tandem with gold. You can trade binary options on gold using this technical analysis.

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 USD/CAD (loonie), check out the Canadian dollar forecast.