AUD/USD Forecast February 10-14 – Coronavirus Weighing on Aussie

0

AUD/USD started last week with gains but these were erased on Friday as the pair recorded sharp losses. The upcoming week has three events. Here is an outlook at the highlights and an updated technical analysis for AUD/USD.

The RBA maintained the benchmark rate at 0.75% for a fourth successive month. The bank said that global economic conditions were “reasonable”, but expressed concern over the U.S.-China trade war and the coronavirus. Retail sales declined by 0.5% in Q4, worse than the estimate of -0.2%. This contraction comes after four quarters of gains. In China, the outlook for small manufacturers worsened, as the Caixin Manufacturing PMI fell to 51.1 in January, down from 51.5 a month earlier.
In the U.S., ISM Manufacturing PMI, a key indicator, rose to 50.9 in January, up from 47.2 a month earlier. This figure beat the forecast of 48.5 points. This marked the first showing expansion since July. The week wrapped up with employment data, which was mixed. Wage growth came in at 0.2%, shy of the estimate of 0.3%. Nonfarm payrolls sparkled with a gain of 225 thousand. This was much stronger than the forecast of 163 thousand.
AUD/USD daily graph with support and resistance lines on it. Click to enlarge:
  1. NAB Business Confidence: Tuesday, 0:30. The National Australia Bank indicator fell to -2 in December, its first reading in negative territory since 2013. We now await the January release.
  2. Westpac Consumer Sentiment: Tuesday, Tentative. Consumer confidence has been declining, with only one gain in the past five months. In January, the indicator fell 1.8%. Will we see a rebound in February?
  3. MI Inflation Expectations: Thursday, 0:00. Analysts track this Melbourne Inflation indicator, as inflation expectations often translate into actual inflation figures. In January, the indicator jumped to 4.7%, compared to 4.0% a month earlier. The February release is next.

AUD/USD Technical Analysis

Technical lines from top to bottom:

We start with resistance at 0.7022.

0.6960 has held in resistance since the first week in January, when AUD/USD went on a sharp slide.

0.6865 (mentioned last week) is the next resistance line.

0.6744 remains relevant. The line switched to resistance following sharp losses by AUD/USD last week.

0.6627 has held in support since March 2009 but is under pressure. 0.6456 is next.

0.6380 is the final support line for now.

I remain bearish on AUD/USD

The coronavirus continues to weigh on investor risk appetite, and with China still struggling to contain the outbreak, risk assets like the Australian dollar are likely to remain under pressure.

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.