Home AUD/USD Forecast Jan. 28-Feb. 1 – U.S. shutdown reprieve boosts Aussie
AUD/USD Forecast, Minors, Weekly Forex Forecasts

AUD/USD Forecast Jan. 28-Feb. 1 – U.S. shutdown reprieve boosts Aussie

The Australian dollar recorded slight gains last week, as the currency surged on Friday. The upcoming week’s key event is Australian CPI.   Here is an outlook for the highlights of this week and an updated technical analysis for AUD/USD.

In a surprise development on Friday, President Trump agreed to reopen government services which had been closed, for a 3-week period. This sent the U.S. dollar broadly lower, and boosted the Australian dollar.

The U.S-China trade war remains a significant concern for the Australian economy, with the U.S. threatening more tariffs in March 1. Chinese officials will be in Washington this week to conduct a second round of trade talks, and any signs of progress would be good news for the Aussie.

Australian employment data was strong last week. The economy created 21.6 thousand jobs, beating expectations. The unemployment rate dipped to 5.0%, down from 5.1%.

[do action=”autoupdate” tag=”AUDUSDUpdate”/]

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

  1. NAB Business Confidence: Tuesday, 00:30. This National Australia Bank survey continues to head lower, as the reading of 3 in November was the weakest since May 2016. The slowdown in China could continue to way on business sentiment.
  2. CPI: Wednesday, 00:30. CPI is the primary gauge of consumer spending. CPI has posted modest gains of 0.4% for three successive quarters, and the same gain is expected in Q4. Trimmed Mean CPI, which excludes the most volatile items, is also forecast to post a 0.4% gain.
  3. Import Prices: Thursday, 00:30. Prices of imported goods feed into consumer prices. The quarterly figure climbed by 1.9% in Q3.   A modest increase of 0.3% is the forecast for Q4. The number does not have a very significant impact on markets after the CPI was already published.
  4. Private Sector Credit: Thursday, 00:30. The indicator dipped to 0.3% in December, its lowest level since July. Another gain of 0.3% is expected in January.
  5. AIG Manufacturing Index: Thursday, 21:30. The Chinese slowdown has weighed on the manufacturing index, which indicated contraction in December, with a score of 49.5 points. Will the indicator rebound into expansion territory in January?
  6. PPI: Friday, 00:30. This inflation indicator surprised in Q3 with a strong gain of 0.8%. This marked the sharpest gain since Q3 of 2015. Will we see another sharp gain in Q4?

*All times are GMT

AUD/USD Technical Analysis

AUD/USD showed limited movement throughout the week. The support line of 0.7165, (mentioned last week) was busy and the pair finally broke through on Friday.

Technical lines from top to bottom:

We start with resistance at 0.7612, which has been a resistance line since June.

0.7480 capped the pair in mid-July and defends the round 0.75 level.

Next is the round number of 0.74, the high point reached at the wake of December. This is followed by 0.7340, which the pair breached in late November.

0.7315 was a swing high seen in late September. Further down, 0.7240 separated ranges in September and in October. 0.7190 marked a low point in the first week of December.

Lower, 0.7165 was a swing low after a recovery in mid-November. 0.7085 was a low point in September and protected the symbolic round number of 0.70.

Close by, 0.6970 played a role back in January 2017.

Below, 0.6825 supported the pair in late 2016 and early 2017.

I am bearish on AUD/USD

China is Australia’s largest trade partner, so the Aussie is sensitive to Chinese data. The most recent Chinese GDP was the lowest since 1990, and further signs of a slowdown in the Chinese economy would likely spell trouble for the Australian currency. The U.S has threatened further tariffs against China on March 1 if the trade talks between the two sides don’t show progress, and such a move would also weigh on the Aussie.

Follow us on Sticher or iTunes

Further reading

Safe trading!

Kenny Fisher

Kenny Fisher

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.