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AUD/USD posted gains for a second straight week. The pair touched a high of 0.6987 last week, its highest level since late July. There  is only one Australian release this week.  Here is an outlook at the highlights and an updated technical analysis for AUD/USD.

In Australia, credit levels remain low, as businesses and consumers are keeping a tight lid on spending, which is not good news for the economy. Private Sector Credit posted a small gain of 0.1% in October, shy of the estimate of 0.2%.
In the U.S. durable goods orders plunged 2.0% in November, compared to a gain of 0.6% a month earlier. This was shy of the estimate of +0.2%. The core release, which excludes volatile items such as aircraft orders, slowed to 0.0%, down from 0.6% in October. This figure was well off the estimate of a 1.5% gain. The weak durables reports indicate that the manufacturing sector is showing signs of weakness. On the employment front, unemployment claims dropped sharply for a second straight week, to 222 thousand. This matched the estimate.
AUD/USD daily graph with support and resistance lines on it. Click to enlarge:
  1. Chinese Manufacturing PMI: Tuesday, 1:00. The Chinese manufacturing sector improved to 50.2 in November, a shade above the 50-level, which separates expansion from contraction. Little change is expected in the December release, with an estimate of 50.1 pts.
  2. Chinese Caixin Manufacturing PMI: Thursday, 1:45. This index follows the official manufacturing PMI. The indicator improved to 51.8 in November, its highest level since 2013. The estimate for December stands at 51.6 pts.
  3. Commodity Prices: Thursday, 5:30. After an extended streak of gains, commodity prices have declined in the past two readings. In November, the indicator declined by 5.0 percent. Will we see a rebound in the December release?

AUD/USD Technical Analysis

Technical lines from top to bottom:

We start with resistance at 0.7340. This is followed by 0.7250.

0.7165 has held firm since early April.

0.7085 has been a resistance line since July. This is followed by 0.7022.

0.6960 has switched to support level following gains by AUD/USD last week. It is a weak line.

0.6865 (mentioned  last week) is the next support level.

0.6744 is next.

0.6686 was tested in the first week of October.

0.6627 has held in support since March 2009. It is the final support line for now.


I remain bullish on AUD/USD

The trade agreement between the U.S. and China, although limited in scope, should boost the Chinese economy. This is good news for Australia, as China is Australia’s number one trading partner. Risk appetite remains strong for now, which is bullish for minor currencies like the Aussie. If AUD/USD can break above the symbolic 70 level, it could gain momentum and continue to move upwards.

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