AUD/USD Forecast Mar. 12-16 2018

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The Australian dollar managed to recover mostly thanks to hopes that the Trump tariffs are not so bad and despite not-so-great Australian data. Can it continue higher? Speeches by RBA members and an important Chinese figure stand out. Here are the highlights of the week and an updated technical analysis for AUD/USD.

The Australian economy grew by only 0.4% in Q4 2017, worse than had been expected, but the RBA expects stronger GDP numbers in 2018. Other figures were mixed: building approvals increased by a whopping 17.1% while retail sales disappointed with a rise of only 0.1%. In the US, Trump eventually signed off the tariffs and lost his top economic advisor Gary Cohn. However, the exemptions that Canada and Mexico received open the door to a further watering down of the duties and allowed the Aussie to recover on a risk-rally. In addition, the hopes for peace in the Korean peninsula also improved the sentiment and gave a boost to the A$.

Updates:

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

  1. Michele Bullock talks: Tuesday, 00:10. The RBA Assistant Governor will be speaking in Sydney and she may shed some light on future economic policy. Bullock is talking in a conference about payments, but there is a Q&A session where she may be asked anything.
  2. NAB Business Confidence: Tuesday, 00:30. This survey of around 350 businesses advanced to 12 points in January, extending the moves from previous months. A similar figure is likely for February.
  3. Home Loans: Tuesday, 00:30. The number of home loans dropped by 2.3% in December, worse than had been forecast. Yet another drop is likely for January: 0.1%.
  4. Christopher Kent talks: Tuesday, 22:10. The RBA Assistant Governor for financial markets delivers opening remarks at a conference in Sydney and may move the Aussie, as he did in the past.
  5. Westpac Consumer Sentiment: Tuesday, 23:30. This survey of around 1200 consumers dropped sharply in January: 2.3%. While the figure is volatile, an increase would be needed to prevent worries.
  6. Chinese Industrial Production: Wednesday, 2:00. Australia’s No. 1 trade partner is expected to show a small acceleration in its growth rate in industrial output: from 6.2% to 6.3% y/y. However, February is the month when China celebrated its new year. The figures are for both January and February and may be distorted because of the festivities.
  7. MI Inflation Expectations: Thursday, 00:00. The Melbourne Institute gets into the gap that the government leaves by publishing inflation figures only once per quarter. Inflation expectations stood at 3.6% in January, slightly lower than beforehand. A similar number is likely now.
  8. RBA Bulletin: Thursday, 00:30. The Reserve Bank of Australia publishes its quarterly report, but most of the data is already out. Any surprising changes to the economic outlook may move the Aussie.
  9. Guy Debelle talks: Thursday, 22:45. This RBA Assistant Governor speaks about risk and return in a low rate environment, thus directly talking about monetary policy. His speech in Sydney may be the most important of all RBA members this week.

*All times are GMT

AUD/USD Technical Analysis

Aussie/USD kicked off the week by emerging from the lows and topping the 0.7760 level (mentioned last week). It managed to close the week above 0.78.

Technical lines from top to bottom:

0.8130 was the high point in 2017 and was challenged early in the year. 0.8050 capped the pair in August and also temporarily in January, on its way up.

0.7990 was the high point in February and protects the 0.80 level. 0.7890 worked as support in February and resistance in October.

0.7760 was the low point in mid-February and works as support. The round level of 0.77 was resistance in December.

Lower, 0.7650 worked as resistance in several occasions in late 2017. The last line to watch is the round 0.75 level.

I remain bearish on AUD/USD

The tariff story is from over and RBA officials may try to push down the currency. Hosuehold debt and wages remain issues for Australia.

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Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

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