AUD/USD jumped 1.6% last week, its strongest week since last September. The upcoming week has just three events. Here is an outlook at the highlights and an updated technical analysis for AUD/USD.
Last week’s highlights were the RBA rate decision and GDP. The RBA held rates at a round 1.00%, which was expected. The rate statement noted that it was reasonable to expect low rates for the near future, so the Aussie is unlikely to get any help from higher rates anytime soon. There was positive news from GDP for the second quarter, which recorded a strong gain of 0.5%, matching the forecast. Investors were also pleased that the Chinese Caixin manufacturing and services PMIs improved in August. On the downside, Australian retail sales declined 0.1% in July, marking the first decline in three months.
- NAB Business Confidence: Tuesday, 1:30. Business sentiment improved to 4 in July, up from 2 a month earlier. This points to stronger confidence in the Australian economy, which is key to increased business investment, hiring and spending. Will the upward trend continue in August?
- Westpac Consumer Sentiment: Wednesday, 0:30. Consumer confidence rebounded in August, with a gain of 3.6%. This follows two straight declines. We will now receive the September data.
- MI Inflation Expectations: Thursday, 1:00. Analysts use this indicator to track actual inflation levels. In July, the indicator rose 3.5%, its highest level in 4 months. Will we see another strong gain in August?
*All times are GMT
Technical lines from top to bottom:
We start with resistance at 0.7165. This line 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 is next.
0.6825 (mentioned last week) has switched to a support role following sharp gains by AUD/USD. It is providing immediate support.
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 neutral on AUD/USD
After several quiet weeks, the Aussie has rallied in impressive fashion. Will this upward trend continue or is it just a retracement before further losses? The U.S-China trade war continues to weigh on the Australian economy, but investors are hopeful that the sides will resume talks in October.
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