AUD/USD Forecast July 3-7 2017

AUD/USD  reversed directions last week and gained 110 points. The pair closed at 0.7683. This week’s key indicators are Retail Sales and the RBA rate statement.  Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

There were no major Australian events last week. In the US, Final GDP in Q1 was revised upwards to 1.4%, above the estimate of 1.2%. In the US, the Fed sounded more skeptical  about inflation picking up. Is the Fed having second thoughts about a third rate hike in 2017?

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

1. AIG Manufacturing Index: Sunday, 19:30. The index continues to point to expansion in the manufacturing sector, although it dropped to 54.8 in May. This marked a 4-month low.
2. MI Inflation Gauge: Sunday, 21:00. The indicator provides analysts with a monthly look at inflation, as CPI is released each quarter. In May, the indicator softened to 0.0%, down from 0.5% a month earlier.
3. Building Approvals:  Sunday, 21:30. Building Approvals tends to show sharp fluctuations, which means that actual readings are often well off the estimates. In April, the indicator bounced back with gain of 4.4%, above the forecast of 3.2%. The forecast for the June report is -1.2%.
4. Chinese Caixin Manufacturing PMI:  Sunday, 21:45. Chinese indicators are closely watched, as they can have a strong impact on the Australian dollar. In May, the index dropped to 49.6, pointing to slight contraction in the manufacturing sector. The estimate for June stands at 49.9.
5. Commodity Prices:  Monday, 2:30. Commodity prices have been showing smaller gains, with a reading of 32.6% in May.
6. Retail Sales:  Monday, 21:30. This key event should be treated as a market-mover. In April, the indicator rebounded with a gain of 1.0%, well above the estimate of 0.3%. This reading broke a streak of two declines. The estimate for the May report stands at 0.3%.
7. RBA Rate Statement:  Tuesday, 00:30. The RBA is expected to maintain the benchmark rate at 1.50%, where rates have been pegged since July 2016. Analysts will be monitoring the rate statement for the bank’s assessment of the health of the Australian economy.
8. Trade Balance:  Wednesday, 21:30. Australia’s trade surplus narrowed to A$0.56 billion in April, much smaller than the estimate of A$1.9 billion. The surplus is expected to increase to A$1.11 billion in the May report.
9. AIG Construction Index:  Thursday, 19:30. The index improved to 56.7 in May, up from 51.9 in the April report. This points to expansion in the construction sector.

AUD/USD Technical Analysis

AUD/USD  opened the week at 0.7571 and quickly touched a low of 0.7564. The pair then reversed directions and climbed to a high of 0.7712 late in the week, as resistance held firm at 0.7749 (discussed last week). The pair closed the week at 0.7683.