AUD/USD Forecast September 16-20 – Will RBA minutes Affect Aussie Rally?

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AUD/USD posted gains for a second straight week, rising 0.50% last week. Investors will be keeping a close eye on the RBA minutes and employment reports. .Here is an outlook at the highlights and an updated technical analysis for AUD/USD.

The Australian dollar continued to post gains last week, despite disappointing confidence numbers. NAB business confidence slowed to 1 point, in August marking a 4-month low. There was no relief from Westpac consumer sentiment, which fell by 1.7% in July, its third decline in the past four months.

Over in the U.S., consumer inflation reports were a mixed bag. CPI slipped to 0.3%, down from 0.1%, but this matched the estimate. Core CPI remained steady at 0.3%, edging above the forecast of 0.2%. The week wrapped up with retail sales, which slowed considerably in August. Retail sales fell to 0.4%, down from 0.7% a month earlier. Core retail sales slowed to zero, compared to 1.0% in the previous release. It was the first time that core retail sales failed to record a gain since March.
AUD/USD daily graph with support and resistance lines on it. Click to enlarge:

AUD/USD – 1-Day Chart

  1. RBA Monetary Policy Meeting Minutes: Tuesday, 1:30. The minutes will provide details of the policy meeting earlier this month. With the Aussie posting gains of over 2.0% in September, the RBA can contemplate lowering interest rates without worrying about the negative effect on the exchange rate.
  2. HPI: Tuesday, 1:30. The housing price index continues to struggle, having posted declines for five successive quarters. Another decline is expected in Q2, with an estimate of -1.0%.
  3. CB Leading Index: Tuesday, 14:30. The Conference Board index posted a sharp gain of 1.3% in June. The markets are predicting a negligible gain of 0.1% in July.
  4. MI Leading Index: Wednesday, 0:30. The Melbourne Institute index is an important gauge of economic activity. The index has recorded three straight declines of 0.1%. The forecast for August reading is +0.1%.
  5. Employment Data: Thursday, 1:30. The economy created 41.1 thousand jobs in July, crushing the estimate of 14.2 thousand. The strong reading helped boost the Australian dollar last week. Another gain is expected in August, with an estimate of 15.2 thousand. The unemployment rate has reeled off four straight readings of 5.2% and no change is expected in the August release.

*All times are GMT

Technical lines from top to bottom:

We start with resistance at 0.7235, which has held in resistance since early February.

0.7165 has held 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 remained relevant this week. Currently, the line is an immediate support line.

0.6825 (mentioned last week) has some breathing room, following gains by AUD/USD last week.

0.6744 is next.

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

Can the Australian dollar continues its recent rally. As a risk currency, a drop in risk appetite could hurt the Aussie. Tensions in the Middle East remain high, although a meeting between Trump and Iranian President Rouhani could send risk appetite soaring. As well, weaker Chinese growth continues to weigh on the Aussie.

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About Author

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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