The Australian dollar posted slight gains last week, as AUD/USD is trading just shy of the 71 level. Traders should keep a close eye on the RBA minutes and employment data. Here is an outlook for the highlights of this week and an updated technical analysis for AUD/USD.
Business confidence dropped sharply in February, with a weak score of 2 points. This marked a 3-year low, as key economic indicators continue to point to an economy in trouble.
In the U.S., mixed consumer data weighed on the U.S. dollar. Core retail sales jumped 0.9%, marking an 8-month gain. However, inflation levels remain sluggish, with CPI coming in at 0.2% and Core CPI at 0.1%. As well, jobless claimed climbed higher than expected.
AUD/USD daily graph with support and resistance lines on it. Click to enlarge:
- RBA Monetary Policy Meeting Minutes: Tuesday, 00:30. The minutes provide details of the March policy meeting. The bank held the benchmark rate at 1.75%. With the economy struggling, investors a dovish stance from policymakers in the minutes could push the Aussie lower.
- HPI: Tuesday, 00:30. The housing market is in trouble, as nervous consumers have cut back on house purchases. The indicator has recorded declines for three straight quarters, and the markets are braced for a sharp drop of 1.9% in Q4 of 2018.
- MI Leading Index: Tuesday, 23:30. The Melbourne Institute leading index has been sluggish, managing just one gain since April of 2018. Will we see any improvement in the February reading?
- Employment: Thursday, 00:30. The labor picture remains bright, despite the toll that the Chinese slowdown has taken on the Australian economy. The economy created 39.1 thousand jobs in February, crushing the forecast of 15.2 thousand. The estimate for February is 15.2 thousand. The unemployment rate is projected to remain at 5.0%.
*All times are GMT
AUD/USD Technical Analysis
AUD/USD showed limited movement, as 0.7085 (mentioned last week) remained relevant throughout the week.
Technical lines from top to bottom:
We start with 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.
0.6744 was a low point in January.
0.6686 was an important cap back in January 2000. It is the final support line for now.
I am bearish on AUD/USD
The Australian economy is showing signs of weakness, with analysts raising the possibility of a rate cut from the RBA if matters don’t improve soon. If the RBA minutes point to uneasiness on the part of policymakers, the Aussie could lose ground.
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Further reading
- EUR/USD forecast – for everything related to the euro.
- GBP/USD forecast – Pound/dollar predictions
- USD/JPY forecast – projections for dollar/yen
- USD/CAD forecast – Canadian dollar analysis
- Forex weekly forecast – Outlook for the major events of the week.
Safe trading!
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