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The Australian dollar had an excellent week, as AUD/USD  jumped about 150 points. The pair closed the week  just above the 1.05 level, at 1.0506.  There are seven events  in the upcoming  week. Here is an outlook of the events and an updated technical analysis for AUD/USD.

The Aussie shrugged off some weak domestic data as it posted solid gains this week. Consumer Sentiment fell sharply, and Australian employment releases were awful, but AUD/USD managed to  climb close to 1.06, before retracting.

Updates: Home Loans came in at 2.0%, beating the estimate of 1.6%. Chinese GDP rose 7.7%, missing the estimate of 8.0%. The RBA released the minutes of  its most recent policy meeting. The RBA noted that previous cuts to interest rates have helped stimulate the economy, but there is still room for further cuts. New Motor Vehicle Sales disappointed, as the consumer indicator dropped -0.6%. RBA Assistant Governor Guy Debelle addressed an economic forum in Melbourne. The Australian dollar took a hit as China released weaker than expected GDP data. The key indicator pointed   to 7.7% gain, missing the estimate of 8.0%. AUD/USD has fallen sharply, as the pair was trading at 1.0354.   MI Leading Index rose 0.6%, compared with a 0.3% gain the previous month. NAB Quarterly Business Confidence rebounded sharply, climbing from -5 points to 2 points in Q1. The G20 is meeting in Washington on Thursday and Friday. AUD continues to point downwards, as the pair was trading at 1.0320.

AUD/USD graph with support and resistance lines on it. Click to enlarge:   AUD USD Forecast Apr 15-19

 

  1. Home Loans: Monday, 1:30. Home Loans provides an excellent snapshot of demand and activity in the Australian housing market. The indicator continues to sag, having posted three straight declines. The markets are expecting better news in April, with a forecast of a gain of 1.6%.
  2. Chinese GDP: Monday, 2:00. Chinese GDP is released quarterly, and is often a market-mover for the Aussie. Q4 for 2012 posted a strong gain of 7.9%, and the  estimate for the upcoming reading stands at 8.0%.
  3. Monetary Policy Meeting Minutes: Tuesday, 1:30. The minutes provide details of the RBA Reserve Bank Board’s most recent policy meeting. The RBA kept interest rates at 3.0%  at the most recent rate setting, and analysts will have a chance to review the reasons for the decision.
  4. New Motor Vehicle Sales: Tuesday, 1:30. This indicator is an important consumer indicator, as an increase in vehicle sales points to increased consumer confidence and spending, which are an important engine of economic growth. The indicator bounced back from a decline in February to  reach 0.0% in March. The markets will be hoping that the indicator can post a gain in the upcoming release.
  5. RBA Assistant Governor Guy Debelle Speaks: Tuesday, 2:45. Debelle will deliver remarks at an economic forum in Melbourne. A speech which is more hawkish than expected is bullish for the Australian dollar.
  6. MI Leading Index: Wednesday, 00:30. This index is based on 9 economic indicators, but is a third-tier release since most of the indicators have already been published. The index posted a modest gain of 0.3% last month.
  7. NAB Quarterly Business Confidence: Thursday, 1.30. This indicator looked very weak in March, dropping to -5 points. This was the indicator’s lowest reading since 2009. Another weak reading would be a sign of weak business confidence, and could hurt the Australian dollar.

 

AUD/USD Technical Analysis

AUD/USD opened at 1.0351, which was also the low of the week. The pair then took off,  reaching a high of 1.0582.  AUD/USD closed the week at 1.0506, as the resistance line at 1.0508 (discussed last week) remained intact at the end of the week.

Technical lines from top to bottom:      

We  begin with resistance at 1.1012. This is followed by 1.0888, which has held firm since August 2011. Next, there is resistance at 1.0789. This is followed by 1.0739. This line has remained intact since March 2012, when the Australian dollar started a steep drop which saw it fall well below parity. The is followed by 1.0605. The pair has not tested this line since September. Below, there is resistance at 1.0508. This line was breached  last week for the first time since  January, but remains as a weak line of resistance.

AUD/USD is receiving   support at 1.0416. This line has strengthened as the pair trades at higher levels. This is followed by 1.0326, which has held firm since mid-March. Next, there is support at 1.0260. Below, the pair is receiving support at 1.0174. This line has held steady since early March. We next encounter support at the line of 1.0080, which is protecting the parity level. This is followed by support at the parity line, which has held steady since June and is a psychologically significant barrier. The final support level for now is at 0.9917.

I am  bearish on AUD/USD.

Despite some weak releases, notably dismal employment numbers, the Australian dollar posted gains against the US  currency last week. However, these weak domestic numbers are likely to weigh on the Australian dollars, even with high Australian interest rates which has helped make the Aussie attractive. With the US posting more weak numbers on Friday, and we could see the pair lose ground as nervous investors stick with the safe-haven US dollar.

The Aussie sometimes moves in tandem with gold. You can trade binary options on gold using this technical analysis.

Further reading: