AUD/USD Forecast Feb. 9-13

The Australian dollar stabilized last week and closed unchanged at 0.7789.  This week’s highlights are NAB Business Confidence and Employment Change. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

The RBA shocked the markets with a rate cut, lower the benchmark rate from 2.50% to 2.25%.  The Australian dollar dropped sharply on the news but managed to recover. In the US, PMIs  were lukewarm, but  there was good news  from a  superb NFP report,  which pushed the pair higher.

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

 

1. RBA Governor Glenn Stevens Speaks: Monday, 00:15. Stevens will speak at an event in Sydney. The markets will be listening carefully after the RBA surprised the markets  with a rate cut last week.
2. ANZ Job Advertisements:  Monday, 00:30. The indicator is the first employment event of the week. Job Advertisements jumped 1.8% in December, marking a six-month high.
3. NAB Business Confidence: Tuesday, 00:30. Business Confidence has looked weak and posted a reading of 2 points in December. Will the indicator improve in the January report?
4. HPI: Tuesday, 00:30. This housing inflation index is an important measure of activity in the housing sector. The index posted a gain of 1.5% in Q3 , close to the estimate of 1.6%. The indicator is expected to improve in the Q4 reading, with a forecast of 2.0%.
5. Westpac Consumer Sentiment: Tuesday, 23:30. This indicator is an important gauge of consumer confidence, which is closely linked to consumer spending. The indicator bounced back in January with a strong gain of 2.4%. Another strong reading could give a boost to the Australian dollar.
6. Home Loans: Wednesday, 00:30. Home Loans have struggled, posting three declines in the past four readings. The November report showed a decline of 0.7%, surprising the markets which had expected a gain of 1.8%. The markets are anticipating a strong rebound for December, with a forecast of 2.3%.
7. RBA Assistant Governor Guy Debelle Speaks: Wednesday, 22:00. Debelle will speak at an FX conference in Sydney. A speech which is more hawkish than expected is bullish for the Aussie.
8. MI Inflation Expectations: Thursday, 00:00. This indicator helps analysts predict actual inflation trends. The indicator dropped to 3.2% in December, down from 3.4% a month earlier.
9. Employment Change: Thursday, 00:30. Employment Change is one of the most important economic indicators and should be treated as a market-mover. The indicator has looked sharp and has beat the estimate in  four of  the past  five readings. The December reading of 37.4 thousand crushed the estimate of 5.3 thousand. However, the markets are braced for a decline in December, with an estimate of -4.7 thousand. Will the indicator surprise and remain in positive territory? The unemployment rate is expected to rise from 6.1% to 6.2%.
10. RBA Governor Glenn Stevens Speaks: Thursday, 22:30. Stevens will testify before the House of Representatives Standing Committee on Economics in Canberra. He will likely be questioned about last week’s rate cut and the RBA’s take on the economy.

* All times are GMT.

AUD/USD Technical Analysis

AUD/USD started the week at 0.7780 and dropped to a low of 0.7626, as support held firm at 0.7601 (discussed last week). The pair then reversed directions, touching a high of 0.7876 late in the week.  AUD/USD then retracted and closed the week at 0.7754.

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

Technical lines from top to bottom:

0.8313 has held firm as resistance since mid-December.

0.8150 is next.

0.7978 was an important cap in January 2007.    The pair tested this line as it pushed past the symbolic 0.80 level.

0.7904 has strengthened in resistance as the pair trades at lower levels.

0.7799  was tested but remains a weak resistance line. It  could  continue to see  action early in the week.

0.7601 held steady as the pair dropped sharply before recovering.   0.7403 is next.

The final support line for now is 0.7283, which has held firm since April 2009.

I am bearish on AUD/USD.

US employment numbers have been positive, allaying concerns that the economy might not be strong enough to withstand a rate hike later in the year. With the RBA cutting rates last week, divergence could weigh on the Australian dollar. This week’s Australian employment data could be an important factor on the Aussie’s fortunes this week.

In our latest podcast, we do an Aussie Analysis, Greek Grindings and Oil Optimism.

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Further reading:

• For a broad view of all the week’s major events worldwide, read the USD outlook.
• For EUR/USD, check out the Euro to Dollar forecast.
• For GBP/USD (cable), look into the British Pound forecast.
• For the Japanese yen, read the USD/JPY forecast.
• For USD/CAD (loonie), check out the Canadian dollar forecast.
• For the kiwi, see the NZDUSD forecast.