AUD/USD Forecast Nov. 2-6 – Aussie slides, RBA expected to trim rates

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AUD/USD continues to show volatility, recording a sharp loss of 1.5% last week. The upcoming week will be very busy, with nine events on the calendar. Here is an outlook at the highlights and an updated technical analysis for AUD/USD.

Australia consumer inflation rebounded in Q3 with a gain of1.6%, up from -01.9%. Trimmed CPI, which excludes the most volatile items, climbed from -0.1% to 0.4%. The National Australia Bank Quarterly Business Confidence survey remained mired in negative territory, with a reading of -10 in Q3.

In the US, durable goods orders improved sharply in September. The headline reading soared to 1.9%, up from 0.4%. This crushed the estimate of 0.5%. The core reading improved to 0.8%, up from 0.4%. Advance GDP jumped 33.1% in Q3 its strongest quarter on record. However, it barely recouped the Q2 loss of 31.4%. There was more good news on the employment front, as jobless claims fell to 751 thousand, down from 787 thousand beforehand. Core PCE Price Index, the preferred inflation gauge of the Federal Reserve, edged down to 0.2%, down from 0.3%. China Manufacturing PMI was almost unchanged at 51.4, which points to stagnation.

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AUD/USD daily chart with support and resistance lines on it. Click to enlarge:
  1. AIG Manufacturing Index: Sunday, 21:30. The Australian Industry Group indicator has indicated contraction for the past two months, with readings below the neutral 50-level. In September, the indicator slowed to 46.7, its lowest level since May. Will we see a reading in expansion territory in October?
  2. MI Inflation Gauge: Monday, 00:00. The Melbourne Institute indicator is pointing to low inflation, with two straight readings of 0.1%. Will we see an improvement in the upcoming release? 
  3. Building Approvals: Monday, 00:30. This construction indicator has managed only one gain in the past six months. Better news is expected in September, with a forecast of 1.5%.
  4. Chinese Caixin Manufacturing PMI: Monday, 1:45. The official Manufacturing PMI came in at 51.4, almost unchanged from the previous release of 51.5. The Caixin PMI is projected to show slight expansion, with a forecast of 52.9.
  5. RBA Rate Decision: Tuesday, 3:30. The RBA has pegged the Cash Rate at 0.25% since March, but has sent broad hints to the markets that it plans to trim rates. Analysts expect the central bank to pull the trigger this week and cut rates to 0.10%. Investors will also be interested in the rate statement, which will provide details on the central bank’s view of the economy.
  6. AIG Construction Index: Tuesday, 21:30. The construction sector remains mired in contraction territory. Still, the reading of 45.7 in September was the highest figure since March 2019. Will the upswing continue in October?
  7. Retail Sales: Wednesday, 00:30. Retail sales have contracted for three successive months, as apprehensive consumers have cut back on spending. A decline of 1.5% is projected for September.
  8. AIG Services Index: Thursday, 21:30. The index slowed to 36.2 in September, down from 42.5 beforehand. This points to sharp contraction. We now await the October data.
  9. RBA Policy Monetary Statement: Friday, 00:30. This statement will provide investors with an additional look at the bank’s view of economic conditions and inflation. The release will carry added significance, coming right after the RBA rate decision.
  • All times are GMT

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AUD/USD Technical Analysis

Technical lines from top to bottom:

We start with 0.7383, an important monthly resistance line.

0.7242 (mentioned last week) is the next resistance line.

The round number of 0.7189 has held in resistance since mid-October.

0.7105 is the next resistance line.

0.7008 has switched to a support role. It is an immediate support line.

0.6841 has held in support since late June.

0.6787 is the final support level for now.

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I am bearish on AUD/USD

The RBA is widely expected to lower interest rates, and the Aussie’s slide could continue if the rate statement is dovish about economic conditions.

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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.