AUD/USD Forecast April 3-7

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AUD/USD was unchanged last week, closing at 0.7627. This week’s key events include Retail Sales, Trade Balance and the Cash RateHere is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

President Trump’s glaring failure to pass his healthcare bill and the Fed’s dovish outlook weighed on the US dollar. At the same time, US numbers remain strong, buoyed by a solid Final GDP report. There were no major releases out of Australia last week.

Updates:

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

  1. AIG Manufacturing Index: Sunday, 23:00. The index jumped to 59.3 in January, pointing to strong expansion in the manufacturing sector. Will this be followed by another solid release in February?
  2. MI Inflation Gauge: Monday, 1:00. This monthly indicator helps analysts track CPI, which is released each quarter. The index declined 0.3% in January, its first decline in 7 months. Will we see a rebound in the February report?
  3. Retail Sales: Monday, 1:30. This key event should be treated as a market-mover. Retail Sales improved to 0.4% in December, matching the forecast. The estimate for January stands at 0.3%.
  4. Building Approvals: Monday, 1:30. This indicator tends to show strong fluctuation, making accurate forecasts difficult. In December, the indicator rose 1.8%, beating the estimate of -0.1%. The markets are braced for a decline of 1.4% in January.
  5. Commodity Prices: Monday, 6:30. The indicator has now improved in 9 straight readings, as stronger global conditions have increased demand for Australian exports. In January, the indicator improved to 56.0%.
  6. Trade Balance: Tuesday, 1:30. Australia’s trade surplus dropped to A$1.30 billion in December, well short of the forecast of A$3.82 billion. The surplus is expected to climb to A$1.75 billion in January.
  7. Cash Rate: Tuesday, 4:30. The RBA is expected to hold rates at 1.50%, where they have been pegged since August 2016. The markets will be combing carefully through the rate statement, which will provide details explaining the RBA’s decision.
  8. RBA Governor Philip Lowe Speech: Tuesday, 9:15. Lowe will speak after the Cash Rate release. A hawkish speech could push the Australian dollar to higher levels.
  9. AIG Services Index: Tuesday, 23:30. The indicator slipped to 49.0 in January, pointing to contraction for the first time since September.
  10. RBA Assistant Governor Guy Debelle Speech: Wednesday, 22:40. Debelle will speak at a conference in Sydney. The markets will be looking for more details about the factors behind the rate decision earlier in the week.
  11. AIG Construction Index: Thursday, 23:30. The index improved to 53.1 in January, the first sign of expansion since September. Will we see another strong reading in February?

AUD/USD Technical Analysis

AUD/USD opened the week at 0.7632 and dropped to a low of 0.7587, testing support at 0.7605 (discussed last week). The pair climbed to a high of 0.7679, but failed to consolidate at this level and closed the week at 0.7627.

Live chart of AUD/USD:

AUDUSD chart by TradingView

Technical lines from top to bottom:

We begin with resistance at 0.8066.

0.7938 is next. This line has held in resistance since May 2015.

0.7835 was the high point in April 2016.

0.7741 was a cap in February.

0.7605 remains busy and was tested in support last week.

0.7513 is providing support. It was a cushion in April 2015.

0.7429 is next.

0.7311 marked a low point in November.

0.7223 is the final support level for now.

I am bearish on AUD/USD

With the RBA unlikely to make a move this week, monetary divergence favors the US dollar. The US economy continues to fire on all cylinders, so sentiment remains favorable for the US dollar.

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About Author

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.

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