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The Australian dollar  lost more ground last week, as AUD/USD  dropped to its lowest level since June 2010. The pair closed the week  at 0.8233. This week’s key indicator is the RBA minutes. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

The US dollar pushed higher  last week,  responding to the upbeat retail sales number  and the excellent consumer confidence report. In Australia, Business and consumer indicators slipped, while employment data was mixed. The RBA had a higher sense of urgency regarding the weakness of the Australian dollar, with Stevens expressing a desire for 0.75. Can the Aussie continue lower?

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

AUDUSDForecast Dec.14-19

  1. New Motor Vehicle Sales: Monday, 00:30.  This is an important indicator of consumer spending, as a new vehicle is an expensive durable good. The indicator has stumbled recently, posting three  declines in the past four releases. The November reading came in at -1.6%.
  2. Mid-Year Economic and Fiscal Outlook: Monday, 1:30. This report provides an updated economic report card of the government’s fiscal performance compared to its strategy in the annual budget which was released back in May. Significant discrepancies between the budget and the outlook report could weigh on the Australian dollar.
  3. RBA  Assistant Governor Guy Debelle Speaks: Tuesday, 00:15. Debelle will speak at a banking conference in Sydney. A speech that is more hawkish than expected is bullish for the Aussie.
  4. RBA  Monetary Policy Meetings Minutes: Tuesday, 00:30. This is the key event of the week. The minutes will provide the details of the policy meeting which took place earlier in December. At the meeting, the RBA said that interest rates will remain at low  levels for the near future.
  5. HSBC Flash Manufacturing PMI: Tuesday, 1:45. The Australian dollar is sensitive to key Chinese numbers, as the Asian giant is Australia’s number one trade partner. The PMI has been hovering just above the 50 line since April, pointing to slight expansion. The estimate for the upcoming release stands at 49.8 points.
  6. MI Leading Index: Tuesday, 23:30. The indicator is based on 9 indicators, but is a minor event since most of the data has been previously released.
  7. RBA Bulletin: Thursday, 00:30. This minor event wraps up the week. The RBA quarterly bulletin  provides an analysis of current and future economic conditions.

* All times are GMT.

AUD/USD Technical Analysis

AUD/USD  started the week  at 0.8307  and  climbed  to a  high of 0.8376. The pair then dropped to 0.8217,  easily breaking below support at 0.8316.  (discussed last week). The  pair closed the week at 0.8233.

Live chart of AUD/USD: [do action=”tradingviews” pair=”AUDUSD” interval=”60″/]

Technical  lines from top to bottom:

With the Australian dollar sustaining losses, we begin at lower levels:

0.8750 has held firm since mid-November.

0.8660 is a strong resistance line. 0.8550 is  next.

0.8456 held firm as the pair posted gains before retracting.

0.8316 has switched to a resistance role as the pair lost ground.

0.8150 has remained intact since September 2007.

0.8013  is the last barrier in front of the psychologically critical line of 0.8000.

0.7978 was an important cap in January 2007.

0.7904 is the final support level for now. The  line was  an important cap in November 2006.

I  remain bearish  on AUD/USD.

The Australian dollar is struggling at multi-year highs as the US numbers continue to shine. The RBA minutes will likely focus on the low interest rate environment that is  expected to continue, as the RBA does feel the economy can weather a rate hike at this time.

In our latest podcast we talk about US jobs, the ECB’s dilemma, a run down of slippery oil and an interesting interview with Itai Furman.

Download it directly here.

Further reading: