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AUD/USD  surged last week, gaining 180 points. The pair closed the week just below the 0.75 level.  This week’s key event is Employment Change.  Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

The US dollar took it on the chin last week, as  Donald Trump disappointed markets  with a press conference that was heavy on theatrics and light on substance. Trump didn’t lay out any economic vision or discuss fiscal stimulus, the catalyst for the greenback’s impressive run since the election. In Australia, Building Approvals rebounded with strong gain of 7.0%, but  Retail Sales disappointed with a gain of 0.2%,  missing expectations.

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

  1. MI Inflation Gauge: Monday, 00:00. This monthly indicator provides a monthly look at consumer inflation and helps analysts predict CPI, which is only released on a quarterly basis.
  2. Home Loans: Tuesday, 00:30.  This indicator helps gauge demand in the housing sector. The indicator has struggled, recording three declines in the past four months. The markets are expecting better news in November, with an estimate of 0.1%.
  3. New Motor Vehicle Sales: Tuesday, 00:30. This indicator is an important gauge of consumer spending, a key driver of economic growth. In November, the indicator came in at -0.6%.
  4. Westpac Consumer Sentiment: Tuesday, 23:30.  Consumer confidence ended 2016 on a sour note, as the December reading came in at -3.9%. Will we see some improvement in the January release?
  5. MI Inflation Expectations: Thursday, 00:00. Analysts use this indicator to help predict actual inflation figures. In November, the indicator improved to 3.4%, up from 3.2% a month earlier. Will the upswing continue?
  6. Employment Change: Thursday, 00:30. Employment Change is one of the most important indicators and should be treated as a market-mover. In November, the economy added 39.1 thousand jobs, well above the estimate of 17.6 thousand. The markets are expecting a weaker gain in December, with a forecast of 10.2 thousand. The unemployment rate edged up to 5.7% in November, above the estimate of 5.6%. No changed is expected in the December release.
  7. HIA New Home Sales: Friday, 00:00. This housing indicator plunged 8.5% in November, after a gain of 2.6% in the previous release.
  8. Chinese GDP: Friday, 2:00. Chinese key indicators often have a significant impact on AUD/USD, as China is Australia’s number one trading partner. The indicator has been steady in 2016, posting three straight quarters of 6.7%. No changed is expected in the fourth quarter.
  9. Chinese Industrial Production: Friday, 2:00. The indicator edged up to 6.2% in November, within expectations. The estimate for the December report stands at 6.1%.

AUD/USD Technical Analysis

AUD/USD  opened the week at 0.7311 and quickly touched a low of 0.7301. It was all uphill from there, as AUD/USD climbed to a high of 0.7518, testing resistance at 0.7513 (discussed last week). AUD/USD closed the week at 0.7491.

Live chart of AUD/USD:

Technical lines from top to bottom:

With AUD/USD posting strong gains last week, we start at higher levels:

We begin with resistance at 0.7938.

0.7835 has held firm since April.

0.7691 was a cap for much of October.

0.7513 was a cushion in April 2015.

0.7427 is next.

0.7311 marked a low point in November.

0.7223 is next.

0.7151 has held in support since late December.

0.7015 is protecting the symbolic 0.70 level. It is the final support level for now.

 

I am bearish on AUD/USD

The US economy enters 2017 in excellent shape and the inauguration of Trump at the end of the week could raise expectations for fiscal stimulus, boosting the US dollar.

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