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AUD/USD  posted slight losses last week, as  the pair closed the week below the 0.93 line for  the first time since late March.  This week’s highlight  is PPI. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

Australian CPI missed the estimate, pushing the Aussie downward. In the US, employment and housing data disappointed, but manufacturing and consumer confidence numbers looked sharp.

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AUD/USD graph with support and resistance lines on it. Click to enlarge:   AUDUSD Forecast Apr28-May2

  1. Private Sector Credit: Wednesday, 1:30. This indicator looks at  the change in total credit issued to consumers and businesses.  An  increase  in  borrowing usually translates into stronger spending.  The indicator has  been fairly steady, posting a gain of 0.4% in February, which matched  the estimate.  No change is expected in the upcoming release.
  2. AIG Manufacturing Index: Wednesday, 23:30. The index has not cracked the 50-point barrier since last September, pointing to ongoing contraction in the Australian manufacturing sector.  Last month’s reading came in at 47.9 points, and the markets will be  hoping for a stronger reading this time around.
  3. Chinese Manufacturing PMI: Thursday, 1:00. Key Chinese indicators such as  PMI releases  can have a significant impact on AUD/USD, since China is Australia’s number one trading partner. Manufacturing PMI  remains just above the  50-point level, pointing to expansion in the manufacturing sector. Little change is expected in the March release, with the estimate standing at  50.5 points.
  4. Import Prices: Thursday, 1:30. Import Prices are published each quarter. The indicator has shown strong volatility, and recent estimates have been well off the actual figures. In Q4, the indicator posted a decline of 0.6%, nowhere near the estimate of 1.5%. The markets are expecting a strong turnaround in Q1, with a forecast of 1.9%. Will the indicator meet or beat this rosy prediction?
  5. Commodity Prices: Thursday, 6:30. Commodities represent a large share of Australia’s export sector, and the indicator continues to limp badly due to the global slowdown. The indicator’s downward slide has been worsening since late 2013, and hit a reading of -12.8% in March. Another steep decline is expected in the April release.
  6. HIA New Home Sales: Friday, Tentative. This indicator is an important gauge of activity in the housing sector as well as well as the strength of consumer spending. The indicator has shown strong movement in both directions, with the March release posting an excellent gain of 4.6%. Will we see another strong showing in the April release?
  7. PPI: Friday, 1:30. Producer Price Index is the highlight of the week. The index is published each  quarter,  magnifying the impact of each release.  PPI  posted a  weak gain of 0.2%  last month,  well short of the estimate of 0.7%. The markets are expecting an improvement in he upcoming release, with the estimate standing at 0.6%.

*All times are GMT.


AUD/USD Technical Analysis

AUD/USD  opened the week at 0.9332. The pair  climbed to a high of 0.9378.    AUD/USD  then  reversed directions,  breaking below support at 0.9283 (discussed last week) as it dropped to a low of 0.9252. AUD/USD closed at 0.9279.


Technical lines from top to bottom:

We  begin with the round number of 0.99, a key resistance level.

Next is 0.9794, which was last tested in June 2013.

There is resistance at the round number of 0.9700, which has held firm since October 2013.

0.9526 provided key resistance in November 2013 and has remained intact since that time.

0.9442  held firm as  AUD/USD pushed  above the 0.94 before retracting. The line marked the high point of  the  pair in November, which saw the Aussie  go on a sharp slide and drop below the  0.89  line.

0.9368 was breached for a  third straight week, but remains in a resistance  role as the Aussie lost ground late in the week.

0.9283  has been busy and has switched to a resistance role, as the pair ended the week just below this line. This  is followed by stronger support at 0.9180.

The round number of 0.9000 is a key psychological level. It has remained intact since early March. AUD/USD has posted impressive gains since then. 0.8893  is the next support line.

The final support level for now is 0.8728.  It  marks the low point of an Aussie  rally which began in early February and  saw the currency cross  above the 0.94 line.

I am  bullish on AUD/USD.

AUD/USD continues to trade at high levels, despite giving up some ground last week. US numbers have been a mix, but the Federal Reserve is likely to implement another QE taper this week, which would mark a thumbs-up from the Fed with regard to the health of the US economy. The markets will be keeping a close eye on NFP, and a strong showing will likely give a boost to the greenback.