AUD/USD made strong moves last week, and surrendered to a major resistance line. This week influx of Australian economic indicators might send the Aussie over the line.
AUD/USD closed at 0.6938 in the previous week and closed the week at 0.7149. The Aussie began the week on the downside, going as low as 0.6768. But that was only one day.
Since Tuesday, it gradually climbed, breaking the 0.71 line that it failed to cross last week, and peaked at 0.7229. It finally closed the week a little lower, but still above the previous’ week peak.
I’ve stated before that 0.7267 is a major resistance line for the Aussie. It was the peak at the beginning of January, as teh Aussie retracted from the great fall that began in October.
So last week, AUD/USD bounced at the resistance line, keeping a safe distance.
But this week, things can change.
There’s lots of data from Australia, as reflected in the Forex Weekly Outlook. The biggest event is on Tuesday: the RBA will set a new Cash Rate. Australia currently has the highest interest rate of all major and minor currencies, passing even it’s neighbor, New Zealand.
Last time, RBA left the interest rate unchanged. Economists are expecting a small rate cut, or another standstill. If the RBA stands firm and doesn’t cut rates, it could push AUD/USD higher. Such an event can be anough for a breakthrough.
And if this isn’t enough, other events follow: monthly Home Loans are out on Wednesday. If they exceed the expected rise of 1.9%, more backwind is with the Aussie.
Major Australian figures are also due on Thursday: Employment Change is expected to fall by 24.8K. These low expectations could be exceeded. Modest expectations also await the Unemployment Rate- it’s expected to rise from 5.2% to 5.4%.
And you’re probably asking yourself about the other side in the equation: the US dollar. So, there aren’t many economic indicators this week from America, so the Aussie’s movement is mostly dependant on Australian data.
If AUD/USD does break the 0.7267 line, the next stop is only somewhere at 0.77-0.78. I’ll write a follow up post if this break occurs.
I believe that Australia relatively strong economy should also be reflected in its currency. We’ll wait and see…
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