AUD/USD showed sharp gains last week, climbing 3.29 percent. This was the Aussie’s best week since June. The upcoming week has three events. Here is an outlook at the highlights and an updated technical analysis for AUD/USD.
The AIG Manufacturing Index jumped to 56.3 in October, which is well into expansionary territory. This is the first reading above the neutral 50 level, which separates expansion from contraction. Building Approvals rebounded strongly in September, with a gain of 15.4%. This crushed the estimate of 1.5%. As expected, the RBA trimmed rates from 0.25% to 0.10% and bank members also implemented QE for the first time ever. Retail Sales remained mired in negative territory for a fourth straight month, with a reading of -1.1%.
In the US, ISM Manufacturing PMI was stronger than expected. The index climbed from 55.4 to 59.3, above the forecast of 55.6 points. The Federal Reserve didn’t make any changes, but hinted at more easing in December. US nonfarm payrolls slowed to 638 thousand, but exceeded the estimate of 595 thousand. Wage growth remained steady at 0.1%, while the unemployment rate dropped from sharply to 6.9%, down from 7.9%. The Ivey PMI improved to 54.5, up from 54.3 points.
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- NAB Business Confidence: Tuesday, 00:30. The National Australia Bank index remains in negative territory, but has been moving upwards. The indicator improved to -4 points in September, marking a 3-month high. Will the improvement continue in October?
- Westpac Consumer Sentiment: Tuesday, 23:30. In October, consumer confidence posted a second straight double-digit gain, with a reading of 11.9%. We now await the November data.
- MI Inflation Expectations: Thursday, 00:00. The Melbourne Institute is a useful inflation indicator, as inflation expectations often translate into actual inflation figures. The September reading improved to 3.4%, up from 3.1% beforehand. Will the upswing continue in October?
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AUD/USD Technical Analysis
Technical lines from top to bottom:
We start with resistance at 0.7595.
0.7421 is an important monthly resistance line.
0.7332 is next.
0.7242 (mentioned last week) is a weak support level.
0.7105 is next.
0.7008 is protecting the symbolic 0.7000 level. It is the final support level for now.
I am neutral on AUD/USD
The Aussie took full advantage of the US election, as the buy-everything mood in the markets saw commodity-based currencies rise sharply. The Australian dollar’s momentum could continue.
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