AUD/USD Forecast – January 4-8 2010
AUD/USD Forecast

AUD/USD Forecast – January 4-8 2010

Looking for the latest outlook, for the current week? Check out the section: AUD/USD Forecast

The Aussie starts the new year around an important technical line. There are many indicators this week, with retail sales and building approvals standing out. Here’s an outlook for the events that will shake the Aussie, and an updated technical analysis for AUD/USD in the first week of 2010.

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

AUD USD 2010 forecast

In various roundups for the year and the decade, the Aussie was noted for being a popular carry trade. This carry trade hasn’t always worked. It will be interesting to see how the high Australian rate will impact the currency’s strength in 2010.

  1. AIG Manufacturing Index: Published on Sunday at 22:30 GMT. This indicator, by the Australian Industry Group, is similar to other countries’ manufacturing PMI. AIG has shown expansion in Australia’s manufacturing sector in the past 4 months. The score, at 51.2 points, is predicted to be repeated with a similar number.
  2. Commodity Prices: Published on Monday at 5:30 GMT. Australia’s commodity based economy moves by commodity prices. The year-over-year number has been negative in recent months, due to fall of prices last year. The drop from December 2008 should be smaller.
  3. HIA New Home Sales: Published on Tuesday, but the exact timing is unknown at the moment. Australia’s Housing Industry Association has posted tow months of significant drops in new home sales. An improvement is expected after last month’s big drop of 6%.
  4. AIG Services Index: Published on Tuesday at 22:30 GMT. According to AIG, the services sector didn’t enjoy many straight months of expansion.  It has been above 50 only in the past two months. The score of 52.5 points is predicted to be followed with a similar score this time.
  5. Building Approvals: Published on Wednesday at 00:30 GMT. This indicator hasn’t been stable in recent months, but the changes are becoming smaller. Last month saw a drop of 0.6%. A rise of 3.1% is predicted this time. A higher score will lift the Aussie.
  6. Retail Sales: Published on Thursday at 00:30 GMT.  This major consumer indicator disappointed in the past two months: once by dropping instead of rising, and later by rising less than expected. The volume of sales is predicted to rise by 0.4% this time, following last month’s 0.3% rise.
  7. Trade Balance: Published on Thursday at 00:30 and overshadowed by retail sales. Australia suffers from a deficit in its trade balance in the past 7 months. The deficit is growing, peaking at 2.38 billion last month. This deficit is predicted to squeeze to 1.8 billion this time, as the price of gold was higher in the measured period.
  8. AIG Construction Index: Published on Thursday at 22:30 GMT. The last of the indicators from AIG is different in being on negative last month: under 50 points. It’s expected to rise back above 50 and indicate expansion.

AUD/USD Technical Analysis

AUD/USD went above the important resistance line of 0.8950, and managed to close above it. This move enjoyed thin holiday trading and should be taken with a grain of salt. AUD/USD closed at 0.8976. This doesn’t change the lines from last week’s outlook.

The first and most important support line is at 0.8950. This was a support and resistance line many times in the past. Further below, 0.88 is a minor support line.

Looking lower, the region of 0.8477 to 0.8520 is very important. AUD/USD struggled to go above 0.8477 during many months in the summer, and after it broke this line, 0.8520 was the the bottom.

Looking above the current close, 0.9090 supports immediate resistance, but a minor one. Higher, 0.9210 is another resistance line that worked as such a few time.

The most significant resistance line appears at 0.9322. It was tested more than once. Check out Casey Stubbs’ monthly setup for AUD/USD for another technical analysis.

I remain neutral on AUD/USD.

Australia is still doing great, having a good job market and a high interest rate. But a few factors weigh on the Aussie: a possible halt in rate hikes, slower-than-expected Q3 growth, and a raging dollar bulls.

Further reading:

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Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.