AUD/USD Forecast Dec 31 2012 – Jan 4 2013


AUD/USD was rangebound last week in thin trading, and closed at 1.0368. There are five releases in the upcoming week. Here is an updated technical analysis for AUD/USD.

There were no economic releases out of Australia last week, and US releases were mixed. The markets kept a close eye on the fiscal cliff in the US, but there was no progress to report, and AUD/USD had a very quiet week.

Updates: Chinese Manufacturing PMI came in at 50.6 points, below the estimate of 51.0. Commidity Prices posted a smaller decline for the second straight reading. The indicator fell by 8.0%. The aussie climbed sharply after the fiscal cliff agreement in the US. AUD/USD was trading at 1.0496. AIG Services Index will be released later on Thursday. The index has not been above the 50 level since Frebruary. The aussie continues to improve as it tests the 1.05 line. AUD/USD was trading at 1.0496.

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

  1. Private Sector Credit: Monday, 00:30. This indicator measures the value of new credit issued to businesses and consumers. The indicator fell to 0.1% last month, its lowest reading since July 2011. The markets are expecting a better showing in January, with an estimate of a 0.3% gain.
  2. Chinese Manufacturing PMI: Tuesday, 1:00. Chinese Manufacturing PMI has been above the 50.0 line for most of 2012, and this key index has improved for the past three readings. The markets are expecting the upward trend to continue, with an estimate of 51.0 for the January release. A strong reading is bullish for the aussie, as China is Australia’s number one trading partner.
  3. AIG Manufacturing Index: Tuesday, 22:30. The Manufacturing Index has been mired in the mid-45 range sine April, indicating ongoing contraction in the Australian manufacturing sector. The markets will be hoping for some improvement in the upcoming release.
  4. Commodity Prices: Wednesday, 5:30. Commodity Prices continue to slump, but there was a silver lining last month, as the indicator reversed a long downward trend, and posted a smaller decline than the November reading. Will the indicator show further improvement in the January reading?
  5. AIG Services Index: Thursday, 22:30. The index has shown some improvement in recent months, but has not cracked the 50.0 line since February, as the services industry continues to contract. The markets will be hoping for a better reading as we begin the new year.

AUD/USD Technical Analysis

AUD/USD opened at 1.0394, and touched the high and low of the week on Monday. The pair broke through the 1.04 line, touching 1.0416, as the resistance line of 1.0424 (discussed last week) held firm. AUD/USD dropped to low of 1.0347. The pair drifted during the remainder of the week,, and closed at 1.0368.

We start with resistance at 1.0874, which has held firm since August 2011. We next encounter resistance at 1.0718, which has not been tested since early March. Below, there is resistance at 1.0605. Next is 1.0508, which was tested in mid-December. This is followed by 1.0424, which held firm as the pair briefly crossed above the 1.04 line.

AUD/USD continues to receive support at 1.0326, which has held firm since mid-November. Below, there is support at 1.0230. We next encounter support at 1.0174, which was last tested in early October.

This is followed by 1.0080, which is protecting the parity level. The parity line, last tested in June, is psychologically significant and the next line of support. We next encounter support at 0.9917. The final support level for now is 0.9815, a strong line which has not been tested since June.

I am neutral on AUD/USD.

AUD/USD has lost over two cents since mid-December, as the volatile currency remains true to form. What’s next for the pair? The first order of business is the fiscal cliff in the US, which is still unresolved as the January 1st deadline looms. The outcome of crisis could have a major impact on AUD/USD. An agreement would be positive for market sentiment and the Australian dollar, while if the US goes over fiscal cliff, we could see a flight of capital to the safe-haven US dollar. The final trading week of the year could be an eventful one.

The Aussie sometimes moves in tandem with gold. You can trade binary options on gold using this technical analysis.

Further reading:

Get the 5 most predictable currency pairs

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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