AUD/USD Forecast Aug. 11-15

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AUD/USD was almost unchanged last week, as the pair closed at 0.9271. This week’s highlight is NAB Business Confidence. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

Australian Retail Sales were strong, but dismal employment data weighed on the Aussie, which dipped below the 0.93 level. In the US, ISM Non-Manufacturing PMI and Unemployment Claims were very strong, as the US recovery continues to impress.

Updates:

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

AUDUSD Forecast AUG11-15

  1.  NAB Business Confidence: Tuesday, 1:30. This is the key event of the week. The indicator has improved for three straight months and reached 8 points last month, its highest level since January. The markets are expecting another strong reading, with an estimate of 8 points.
  2. HPI: Tuesday, 1:30. The House Price Index is an important gauge of activity in the housing sector. The index softened in June, with a gain of 1.7%, a four-month low. This was well below the forecast of 3.0%. The indicator is expected to weaken again in July, with an estimate of 1.1%.
  3. Westpac Consumer Sentiment: Wednesday, 00:30. Analysts closely follow consumer confidence indicators, since increased consumer confidence usually translates into stronger consumer spending, which is crucial for economic growth. The index has struggled in 2014, but posted an excellent gain of 1.9% last month, its best showing since October. Will the indicator repeat this month with a strong gain?
  4. Wage Price Index: Wednesday, 1:30. Australian inflation levels remain low, and the RBA does not expect stronger inflation numbers anytime soon. The index has been very steady, with four of the past five readings at 0.7%. Little change is expected in the upcoming release, with the estimate standing at 0.8%.
  5. MI Inflation Expectations: Thursday, 1:00. This indicator is useful for tracking inflation, as consumer expectations regarding inflation can translate into actual inflation trends. The indicator jumped 4.4% in April but has since retracted, posting a gain of 3.8% last month. No significant change is expected in the July release.

* All times are GMT.

AUD/USD Technical Analysis

AUD/USD opened the week at 0.9311 and touched a high of 0.9374, breaking above resistance at 0.9369 (discussed last week). The pair then reversed directions, slipping to a low of 0.9239. The pair closed the week at 0.9271.

Live chart of AUD/USD:


Technical lines from top to bottom:

We start with resistance at 0.9757. This line marked the start of a rally by the US dollar back in October 2013, which saw the pair drop as low as 0.8650.

This is followed by the round number of 0.9622, which has held firm since October 2013.

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

0.9441 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.

0.9369 was breached as the pair moved higher in the middle of the week. It recovered and is providing strong resistance.

0.9279 has switched to a resistance role as the pair broke below this line late in the week. It is a weak line and could see further action early in the week.

0.9175 is providing strong support.

The round number of 0.9000 is a key psychological level. It has remained intact since early March.

0.8891 has provided strong support since February.

0.8758 was an important support line in January and has held firm since then.

I am bearish on AUD/USD.

The Australian dollar has lost some of its luster, as the currency trades below the 0.93 for the first time since June. US data has been solid and it’s only a matter of time before the Fed will raise interest rates.

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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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