AUD/USD was unchanged over the week, as the pair closed at 0.7550. There are 11 events this week. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.
Australian key indicators disappointed, as Private Capital Expenditures and Retail Sales both missed expectations. AUD/USD posted gains late in the week, courtesy of a dismal US nonfarm payrolls report, as the indicator plunged to 151 thousand, well short of the forecast of 180 thousand.
[do action=”autoupdate” tag=”AUDUSDUpdate”/]AUD/USD graph with support and resistance lines on it. Click to enlarge:
- AIG Services Index: Sunday, 23:30. The indicator improved to 53.9 points in June, marking an 11-month high. Will the upward trend continue in July?
- MI Inflation Gauge: Monday, 1:00. Analysts use this monthly indicator to help predict the CPI release, which is only released each quarter. The indicator reversed directions last week, posting a decline of 0.3%.
- Company Operating Profits: Monday, 1:30. This important business indicator is released each quarter, magnifying the impact of each release. After sharp declines in the past two quarters, the markets are expecting a turnaround in the Q2, with a forecast of 2.1%.
- Current Account: Tuesday, 1:30. This indicator is closely linked to currency demand. In the first quarter, the current account deficit came in at A$20.8 billion, larger than the forecast of A$19.3 billion. This marked the fourth straight quarter that the indicator has missed expectations. Will we see an improvement in the second quarter reading?
- Cash Rate: Tuesday, 4:30. The RBA has not hesitated to lower rates, with two quarter-point cuts in 2016. The markets are not expecting any move at the bank’s September meeting. Currently, the benchmark rate stands at 1.50%.
- AIG Construction Index: Tuesday, 23:30. The index softened in July, although the reading of 51.6 still showed slight expansion in the construction sector. Will we see another reading above the 50-line in the August release?
- GDP: Wednesday, 1:30. GDP is one of the most important indicators, and an unexpected reading can result in movement from AUD/USD. In Q1, the economy expanded 1.1%, well above the forecast of 0.6%. However, a much smaller gain is expected in Q2, with an estimate of 0.4%.
- RBA Assistant Governor Philip Lowe Speaks: Wednesday, 22:55. Lowe will speak at an event in Sydney. Analysts will be listening carefully, looking for clues as to future monetary policy.
- Trade Balance: Thursday, 1:30. Australia’s trade deficit widened to A$3.20 billion in June, well above the estimate of A$2.00 billion. The estimate for the deficit in July stands at A$2.65 billion.
- Chinese Trade Balance: Thursday, Tentative. The Aussie is sensitive to key Chinese releases, as the Asian giant in Australia’s number one trading partner. The trade surplus jumped to A$343 billion in July, well above the forecast of A$313 billion. The upward trend is expected to continue in August, with an estimate of A$372 billion.
- Home Loans: Friday, 1:30. This indicator provides a snapshot of the level of activity in the housing sector. The indicator bounced back in June, posting a strong gain of 1.2%. This figure was well short of the forecast of 2.4%. The markets are bracing for decline in July, with an estimate of 1.3%.
AUD/USD Technical Analysis
AUD/USD opened the week at 0.7540. The pair dropped to a low of 0.7490. AUD/USD then reversed directions and posted sharp gains, climbing to a high of 0.7616, testing resistance at 0.7597 (discussed last week). AUD/USD closed the week at 0.7550.
Live chart of AUD/USD:
Technical lines from top to bottom:
We start with resistance at 0.8025.
0.7938 is next.
0.7835 has provided resistance since April.
0.7692 has been a cap since the last week in August.
0.7597 is an immediate resistance line.
0.7513 was tested in support. This line was a cap in May and June.
0.7438 is the next support level.
0.7334 was a cap in December 2015.
0.7192 is the final support level for now.
I remain bearish on AUD/USD
Australian GDP in Q2 is expected to soften, which could send the Aussie lower. In the US, the timing of a move by the Federal Reserve is up in the air but, the direction is clear, as there is a strong likelihood a rate hike before the end of the year.
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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 the Canadian dollar (loonie), check out the Canadian dollar forecast.
- For the kiwi, see the NZD/USD forecast.
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