AUD/USD Forecast July 15-19 – Chinese GDP, RBA could weigh on Aussie

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AUD/USD reversed directions last week, posting moderate gains. Investors will be keeping a close eye on Chinese GDP and Australian job numbers. Here is an outlook at the highlights and an updated technical analysis for AUD/USD.
Australia posted weak confidence numbers last week, but the Aussie shrugged off the soft numbers. The NAB Business Confidence index slowed to 2 in June, down from 7 a month earlier. There was no relief from Westpac Consumer Sentiment, which plunged 4.1%, marking a 4-month low.
Federal Reserve Chair Jerome Powell appeared before congressional and senate committees last week, and his dovish message sent the U.S .dollar down and equity markets higher. Powell said the Fed was prepared to “act as appropriate” and noted his concern over low inflation and weak global conditions. Powell’s message has raised expectations of a rate cut later in July, as did the Federal Reserve minutes, which were dovish. The CME Group has priced in a rate cut at 77%. On the inflation front, June data was mixed. The headline reading remained unchanged at 0.1%. Core CPI improved to 0.3%, its strongest gain since January 2018.
AUD/USD daily graph with support and resistance lines on it. Click to enlarge:
  1. Chinese GDP: Monday, 2:00. Chinese GDP should be treated as a market-mover, as China is Australia’s largest trading partner. The Chinese economy grew by 6.4% in the past two quarters, but is expected to dip to 6.2% in Q2.
  2. RBA Monetary Policy Meeting Minutes: Tuesday, 1:30. The RBA has been more than busy, cutting rates in June and July. If the minutes present a sour economic picture, the Aussie could lose ground.
  3. MI Leading Index: Wednesday, 0:30. The index has posted two successive declines of -0.1%. We will now receive the June release.
  4. Australian jobs report: Thursday, 1:30. The economy has recorded strong jobs growth and sparkled in June, with an estimate of 42.3 thousand. The estimate for June stands at 9.1 thousand. The unemployment rate is expected to remain unchanged at 5.2%.

Technical lines from top to bottom:

We start at 0.7340, which has held in resistance since early December.

0.7315 was a swing high seen in late September.

0.7240 separated ranges in September and in October.

0.7165 (mentioned last week) has held in resistance since early April.

0.7085 was a low point in September.

0.7022 was tested in resistance late in the week and starts the new trading week under pressure.

The pair broke through resistance at 0.6988 late in the week. It marked the low point in April.

0.6940 has held in support since late June.

0.6864 was a low point in May.

0.6744 was a low point in January.

0.6686 was a cap back in January 2000.

I remain bearish on AUD/USD

The U.S-China tariff war has taken its toll on the Chinese economy, and a soft Chinese GDP this week could drag down the Aussie. The RBA has sliced interest rates to 1.0% in an attempt to stimulate the economy, and the sharp drop in rates has made the Aussie less attractive to investors.

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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.