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The Australian dollar  weakened during the week but was unchanged  at week’s end. AUD/USD closed the week at 0.7808. This week’s highlight is PPI. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

In the US, there was some good news on the housing front, with existing home sales beating expectations. However, New Home Sales failed to keep pace and Durable Goods Orders were a mixed bag. Australian inflation data was steady  and helped the Aussie hold its own this week against the greenback.

[do action=”autoupdate” tag=”AUD/USDUpdate”/]

AUD/USD graph with support and resistance lines on it. Click to enlarge:

AUD_USD_Forecast.Apr 27-May1

  1. RBA Governor Glenn Stevens Speaks: Monday, 22:40. Stevens will speak at an event in Sydney.  A  speech that is more  bullish than expected is hawkish for the Australian dollar.
  2. CB Leading Index: Tuesday, 00:00. This minor indicator is based on 7 economic indicators. The index has been moving higher, and has posted two straight gains of 0.4%.
  3. Import Prices:  Thursday, 1:30. This indicator is released each quarter, magnifying the impact of each release. The indicator bounced back in Q4, posting a strong gain of 0.9%. Still, this was well short of the forecast of 1.5%. The markets are expecting another strong reading in the Q1 report, with an estimate of 1.1%.
  4. Private Sector Credit: Thursday, 1:30.   Borrowing levels are carefully monitored, as higher levels of borrowing usually leads to increased spending. The indicator has been very steady, and posted a gain of 0.5% in February, matching the forecast. Another gain of 0.5% is expected in the March report.
  5. AIG Manufacturing Index: Thursday, 23:30. The index remains under the 50-point level, which separates contraction from expansion. The indicator came in at 46.3 points in February.
  6. PPI: Friday, 1:30. This is the key event of the week. PPI measures inflation in the manufacturing index, and an unexpected reading can have a substantial impact on AUD/USD. The indicator posted a weak gain of 0.1% in Q3, within expectations. The Q4 forecast stands at 0.2%.
  7. Chinese Manufacturing PMI: Friday, 1:00.  The Aussie is sensitive to key Chinese data such as PMIs, as the Asian giant is Australia’s number one trading partner. The indicator continues to trade close to the 50-point level, which separates between contraction and expansion. The PMI  was steady in February at  50.1 points, above  the estimate was 49.7 points. The forecast for the  March report is exactly 50.0 points.
  8. Commodity Prices: Friday, 6:30. Commodity Prices  remains in a  deep  slump as the export sector’s woes continue. The February reading came in at -19.7% and no significant improvement is likely in the upcoming in the March report.

* All times are GMT.

AUD/USD Technical Analysis

AUD/USD started the week at 0.7804 and slipped to a low of 0.7682. The pair then  recovered and climbed to a high of 0.7841. The pair closed at 0.7808, just above support at 0.7799 (discussed last week).

Live chart of AUD/USD: [do action=”tradingviews” pair=”AUDUSD” interval=”60″/]

Technical lines from top to bottom:

We  start with resistance at 0.8150. This line has remained intact since late January.

0.8077 was an important resistance line in January.

0.7978 was an important cap back in January 2007.

0.7799 was tested by the pair and is currently a weak resistance line. It could see further action early in the week.

0.7692 has switched to a support role following the Aussie’s strong gains.

0.7601 has strengthened as a support line. This line has been busy in the month of April.

0.7528 is the next support level.

0.7403 has held firm since May 2009. At that time, the Aussie was in the midst of a rally which saw it climb above the 0.94 line.

The final support line for now is 0.7283.

I  am bearish on AUD/USD.

The Australian dollar has not been able to take advantage of weak US numbers in recent weeks, so the pair could drop if US releases bounce back. Although a rate hike  by the Fed  is not imminent, divergence with the RBA will continue to weigh on the Aussie, which could move closer to the 0.75 level.

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Further reading: