AUD/USD Forecast October 14-18 – Investors Eye RBA Minutes, Chinese GDP

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AUD/USD posted slight gains last week, closing just before the 0.68 level. The upcoming week has five events, including the RBA minutes and employment change. Here is an outlook at the highlights and an updated technical analysis for AUD/USD.

Australian confidence indicators looked weak. NAB Business Confidence dipped to 0, marking a 5-month low. This was followed by Westpac Consumer Sentiment, which declined by 5.5%, its third decline in four months.

The Federal Reserve released the minutes of its September meeting, at which the Fed trimmed rates by a quarter-point. The minutes were dovish tone, as members said that the risks to U.S. growth “were tilted to the downside.” Policymakers raised concerns about weak global growth, the toll of the U.S-China trade war and low inflation. The Fed appears ready to cut rates again – according to the CME Group, the likelihood of a 1/4 point rate cut in October stands at 75%. U.S. consumer inflation reports for September were a disappointment, missing their forecasts. The headline reading slipped to 0.0%, while Core CPI slowed to 0.1%. Inflation levels remain subdued, well below the Federal Reserve’s target of 2.0%.
AUD/USD daily graph with support and resistance lines on it. Click to enlarge:

  1. RBA Monetary Policy Meeting Minutes: Tuesday, 0:30. The minutes will provide details of the policy meeting earlier this month, when the RBA cut rates for the third time since June. A dovish message from the bank could weigh on the Aussie.
  2. MI Leading Index: Tuesday, 23:30. The Melbourne Index has struggled, having posted just one gain since April. Will we see better news from the September release?
  3. Chinese New Loans: Tuesday, 15th-16th. New bank loans improved to 1210 billion yuan ($170 million) in August. The indicator is expected to rise to 1350 billion yuan ($190 million) in September.
  4. Employment Data: Thursday, 0:30. The Australian labor market has been strong, as the economy has created 75,000 jobs in the past two months, and the September estimate stands at 15.3 thousand. The unemployment rate is projected to remain at 5.3%.
  5. Chinese GDP: Friday, 2:00. The Chinese economy continues to lose steam and slowed to 6.2% in the third quarter. A year ago, GDP posted a gain of 6.7%. The downward trend is expected to continue, with an estimate of 6.1%.

*All times are GMT

Technical lines from top to bottom:

We start with resistance at 0.7165. This line has held firm since early April.

0.7085 was a low point in September. 0.7022 is next.

0.6988 marked the low point in April.

0.6865 was active in mid-September and has some breathing room in resistance.

0.6825 (mentioned last week) is an immediate resistance line.

0.6744 was relevant throughout the week. It is providing support.

0.6686 was a cap back in January 2000.

0.6627 has held in support since March 2009. 0.6532 is next.

0.6456 is the final support level for now.

I am bearish on AUD/USD

The RBA has slashed interest rates, but the domestic economy has yet to respond to these moves. Weak global demand has taken a toll on the manufacturing and export sectors, and the Aussie will have difficulty attracting investors.

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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.

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