Australian employment numbers were mixed last week. The economy created 28.4 thousand jobs in April, marking a 3-month high and crushing the estimate of 15.2 thousand. However, the unemployment rate climbed to 5.2%, higher than the estimate of 5.0%. This is the highest level since August. The Westpac Consumer Sentiment slowed to 0.6%, while the wage price index remained pegged at 0.5%.
Trade tensions between the U.S. and China rose sharply last week. The U.S. and China exchanged tariffs on each other products, dampening hopes for a trade deal and weighing on risk appetite. The U.S. raised tariffs on $200 billion in Chinese goods, from 10% to 25%. The Chinese response was vigorous, as China retaliated with tariffs on $60 billion of U.S products. Although the U.S.and China are scheduled to continue trade talks, investors are wary after the latest tariff battle.
AUD/USD daily graph with support and resistance lines on it. Click to enlarge:
- RBA Monetary Policy Minutes: Tuesday, 1:30. The minutes will provide details about the RBA meeting earlier this month, when the RBA maintained rates at 1.50%. The markets had expected a 25-point basis cut to reflect weakness in the Australian economy.
- CB Leading Index: Tuesday, 14:30. The Conference Board index is based on 7 economic indicators. The index posted a gain of 0.5% in March. Will we see an improvement in the April release?
- Construction Work Done: Wednesday, 1:30. The indicator is pointing to weakness in the construction sector, posting declines for two successive quarters. The estimate for Q1 is a small gain of 0.1%.
*All times are GMT
AUD/USD Technical Analysis
Technical lines from top to bottom:
With AUD/USD posting sharp losses, we start at lower levels:
0.7240 separated ranges in September and in October.
0.7190 is next.
Close by, 0.7165 (mentioned last week) was a swing low after a recovery in mid-November.
0.7085 was a low point in September.
0.6988 marked the low point in April. It remained relevant throughout the week.
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.
0.6547 was an important resistance line back in December 2008.
I remain bearish on AUD/USD
With the U.S-China trade war heating up, the Aussie was steamrolled as risk appetite evaporated. The slide could continue as U.S. and Chinese tariffs are set to take effect shortly.
- 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.