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AUD/USD  posted strong gains last week, climbing about 150 points. The pair closed at 0.9245.  This week’s highlights are the Cash Rate and Retail Sales. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

Australian data was uneventful last week, as the RBA maintained interest rates at 2.50%. RBA head Glenn Stevens did note that the Aussie’s recent improvement is not to the Bank’s liking, since it is impeding economic growth.  In the US,  Non-farm Employment Change improved in March but fell short of expectations.  The Aussie challenged the 0.93 cap several times without success.

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AUD/USD graph with support and resistance lines on it. Click to enlarge:   AUDUSD Forecast April 7-11th

  1. HIA New Home Sales: Monday, Tentative. New Home Sales is an important gauge of consumer spending, as a new home is likely the largest item that a consumer will purchase. The indicator bounced back last month with a respectable gain of 0.5%.
  2. Private Sector Credit: Monday, 00:30. This indicator is an important gauge of consumer spending, as borrowing by consumers usually translates into consumer spending. The indicator posted a gain of 0.4% last month, and this is the estimate for the upcoming release.
  3. AIG Manufacturing Index: Monday, 22:30. The index remains under the 50-point level, indicating ongoing contraction in the manufacturing sector. The indicator came in at 48.6 points last month, markets will be hoping for an improvement in the February release.
  4. Chinese Manufacturing PMI: Tuesday, 1:00. Key Chinese indicators can have a significant impact on AUD/USD, as China is Australia’s most important trading partner. The index has been posting releases just above the 50 line, which separates expansion from contraction. The indicator came in at 50.2 points last month, and a similar reading is  expected in the upcoming release.
  5. Chinese HSBC Final Manufacturing PMI: Tuesday, 1:45. This PMI follows  last week’s  HSBC Flash Manufacturing PMI, which missed the estimate, coming in at 48.1 points. The markets are expecting a similar result from the Final release, with  the estimate standing at 48.5 points.
  6. Cash Rate: Tuesday, 3:30. The benchmark interest rate has remained at 2.50% since last August. This rate is at a historic low, and the RBA has stated that it does not expect to alter the rate in the near future. The RBA will announce its decision in a Rate Statement.
  7. Commodity Prices: Tuesday, 5:30. Commodity Prices continues post larger declines, as global demand for Australian exports remains weak. The indicator came in at -12.9% last month, its worst showing since October 2012.
  8. Building Approvals: Wednesday, 00:30. The indicator posted an excellent gain of 6.8% last month, reversing three consecutive declines. However, the markets are expecting another decline, with the estimate standing at -1.7%.
  9. AIG  Services Index: Wednesday, 22:30. Services Index crossed above the 50 line last month, for the first time in two years.   The indicator jumped to 55.2 points. The 50-point level separates contraction from expansion.
  10. Retail Sales: Thursday, 00:30. Retail Sales is the primary gauge of consumer spending, and one of the most important economic indicators. The indicator jumped to 1.2% last month, easily beating the estimate of 0.5%. The estimate for the March estimate stands at 0.4%.
  11. Trade Balance: Thursday, 00:30. Trade Balance has posted two straight surpluses after a host of declines. The previous release came in at $1.43 billion, crushing the estimate of $0.11 billion. The estimate for the upcoming release stands at $0.82 billion.
  12. RBA Governor Glenn Stevens Speaks: Thursday, 2:00. Stevens will address an event in Brisbane. Analysts will be looking for any hints with regard to the RBA’s future monetary policy.

*All times are GMT.

 

AUD/USD Technical Analysis

AUD/USD  opened the week at 0.9093 and  dropped to a low of 0.9045. The pair then  reversed directions,  climbing all the way to 0.9295, breaking support at 0.9283 (discussed last week). AUD/USD closed at 0.9245.

 

Technical lines from top to bottom:

With the Aussie posting strong gains, we begin at higher ground:

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 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. This is followed by resistance at  0.9368, which was an important line in mid-November.

Next, there is resistance at 0.9283. This line  saw a lot of action in the months of June and July, alternating between resistance and support roles. It was briefly breached last week and is currently a weak resistance line.

0.9180  has switched to a support role as the Aussie moves higher. This line had remained intact since late November.

We find support for the pair at 0.9000, which remained intact as the Aussie retracted from some early gains. This key line  is not strong  and could see action early in the week.

0.8893  is the next support line. 0.8728 marks the low point of an Aussie  rally which began in early February and pushed above the 0.90 level.

The final support level for now is 0.8578, which has remained intact since  July 2010.

I am  bearish on AUD/USD.

The RBA has not been shy about the fact that it wants to see the Aussie under the 0.90 line, and we can expect the RBA to continue to “talk down” the currency. Market sentiment remains positive about the US economy, and the US dollar  has room to move higher  if US numbers don’t disappoint.