AUD/USD Forecast December 16-20 – Aussie closing in on Lofty 70 Level

0

AUD/USD posted gains for a second successive week. The pair touched a high of 0.6939, its highest level since July. Investors will be keeping a close eye on the RBA minutes and employment reports. Here is an outlook at the highlights and an updated technical analysis for AUD/USD.

Australia’s Housing Price Index gained 2.4% in Q3, after six consecutive quarters with declines. Confidence indicators headed lower – NAB Business Confidence slowed to zero in November, down from 2 pts a month earlier. The Westpac Consumer Sentiment sagged in December, with a decline of 1.9 percent, compared to a gain of 4.5% in November.
In the U.S., the Federal Reserve sent a dovish message to the markets, as the dot plots showed that most FOMC members did not anticipate a rate hike before 2021. CPI gained 0.3% and Core CPI rose 0.2%, as both were within expectations. Retail sales dipped to 0.2%, shy of the estimate of 0.5%. Core retail sales slowed to 0.1%, missing the forecast of 0.4%. On Thursday, there were reports that the U.S. and China had reached a limited trade agreement, which could signal the beginning of the end of the nasty trade war which has dampened global growth.
AUD/USD daily graph with support and resistance lines on it. Click to enlarge:
  1. Flash Manufacturing PMI: Sunday, 22:00. The PMI came in at 49.9 in October, pointing to stagnation in manufacturing. Will the PMI push into expansion mode in the November release?
  2. Flash Services PMI: Sunday, 22:00. Final Services PMI slipped to 49.5 in October, marking a 3-month low. We will now receive the November release.
  3. RBA Monetary Policy Meeting Minutes: Tuesday, 0:30. The minutes will provide details of the RBA meeting from earlier in December. A dovish stance from rate-setters could weigh on the Aussie.
  4. CB Leading Index: Tuesday, 23:30. This Conference Board indicator posted a weak gain of 0.2% in September. We now await the October data.
  5. Employment Reports: Thursday, 0:30. The economy has created jobs in recent months, but the indicator sagged in October, with a decline of 19.0 thousand. In November, better news is expected, with a forecast of 15.2 thousand. The unemployment rate is expected to remain pegged at 5.3 percent.

*All times are GMT

Technical lines from top to bottom:

We start with 0.7165, which has held firm since early April.

0.7085 has held since July. This is followed by 0.7022.

0.6960 came under pressure during the week as AUD/USD posted strong gains.

0.6865 (mentioned last week)  has switched to a support role. It is a weak line.

0.6744 is providing support.

0.6686 was tested in the first week of October.

0.6627 has held in support since March 2009. This is followed by 0.6532.

0.6456 is the final support level for now.

.

I am bullish on AUD/USD

The Australian dollar gained ground after reports that the U.S. and China have agreed to a limited trade agreement. An end to the bitter trade war will boost the Australian economy, as China is Australia’s largest trading partner.

Follow us on Sticher or iTunes

Further reading:

Safe trading!

Get the 5 most predictable currency pairs

About Author

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.

Comments are closed.