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The Australian dollar  continues to lose ground against the US currency, and lost close to a cent on the week.  AUD/USD closed the week at 0.9060.  This week highlights include Consumer Sentiment and Employment Change. Here is an outlook of the events and an updated technical analysis for AUD/USD.

Australian releases continue to struggle, as Retail Sales and Building Permits, both key events, missed their estimates. The Aussie also lost ground as the broadly stronger US dollar got a boost late in the week from a strong Non-Farm Payroll release. Will AUD/USD lose the 0.90 line?

Updates:

AUD/USD graph with support and resistance lines on it. Click to enlarge:   AUD USD Forecast July8-12

  1. ANZ Job Advertisements: Monday, 1:30. This employment indicator has not looked good, with only one monthly gain in 2013. The indicator had its worst showing of the year in June, with a sharp decline of -2.4%.  Will we see some improvement in the upcoming release?
  2. NAB Business Confidence: Tuesday, 1:30. This indicator is based on a survey of 350 businesses which are asked to rate business conditions. The indicator has reeled off two consecutive readings below zero, which indicates worsening conditions. The markets will be hoping for a turnaround in the July release.
  3. Chinese CPI: Tuesday, 1:30. This key inflation index dropped to 2.1% in June, well below the estimate of 2.5%. The markets are expecting a rebound this time around, with an estimate of 2.5%. The Australian dollar is sensitive to key Chinese releases, as China is Australia’s largest trading partner.
  4. Westpac Consumer Sentiment: Wednesday, 00:30. This indicator measures  consumer  confidence. This is important as a confident consumer will be more likely to make purchases, and consumer spending is critical for economic growth. The indicator tends to move sharply in either direction. The indicator bounced back after a steep decline in May, and posted a strong 4.7% gain in June. Will the indicator repeat with another strong showing?
  5. Chinese Trade Balance: Wednesday, Tentative. This is a key release, but traders should note that the data is not always reliable and is prone to early leaks. China posted a trade surplus of $20.4 billion in June, slightly below the estimate. The forecast for the July reading calls for a higher surplus, with an estimate of $27.8 billion.
  6. RBA Assistant Governor Guy Debelle Speaks: Wednesday, 7:30. Debelle will address a financial forum in Sydney. Analysts will be listening carefully for any clues regarding the RBA’s future monetary policy.
  7. MI Inflation Expectations: Thursday, 1:00. Inflation Expectations helps predict actual inflation figures, and is released on a monthly basis. The indicator has been very steady in 2013, and has posted gains of 2.3% for the past two readings.
  8. Employment Change: Thursday, 1:30. This is one of the most important economic releases, and can affect the movement of AUD/USD. In June, the indicator pointed to a gain of 1.1 thousand, and this modest rise easily surpassed the estimate of -9.8 thousand. The markets are expecting a very small gain this time around, with a forecast of 0.3 thousand. Will the indicator again  beat the estimate? The Unemployment Rate will be released at the same time. The rate has come in at 5.6% for the past two releases, and the July forecast stands at 5.6%.
  9. Home Loans: Friday, 1:30. Home Loans provides a snapshot of activity in the housing industry, and is an important gauge of consumer spending. The indicator dropped in June from 5.2% to 0.8%, and this was well short of the estimate of 2.1%. The markets are expecting better news in the July release, with an estimate of 2.3%. Will the indicator meet or  beat the prediction?

AUD/USD Technical Analysis

AUD/USD  continued to  point downward  this week and the critical 0.90 line is now in striking distance.  The pair opened at 0.9142 and quickly touched a high of 0.9254. The pair  then  dropped to a low of  0.9038, briefly breaking  through support at 0.9041 (discussed last week). The pair  closed the week at 0.9060.

Technical lines from top to bottom:      

We  begin with strong resistance at 0.9634. This line saw some action in May, and the pair has continued to drop sharply since then.

0.9549 is the next line of resistance.  This is followed by 0.9428,  which had a busy month  in  June. Prior to that, this line  had  provided strong support, and had remained intact since October 2011.

0.9283 follows, and this resistance line has strengthened as the pair trades at lower levels. Below, 0.9171 started the week as a weak resistance line, but has gained some breathing room as the Aussie continues to slide.

AUD/USD is receiving support at 0.9041. This line is protecting the psychologically important  90 level. The line has weakened as the pair pushes ever lower, and it could be tested early next week.

0.8893 was last  breached in August 2010, as the Australian dollar put together a strong  rally which saw it  climb  above the 1.10 line. This is followed by 0.8747, which has remained in place since July 2010.

The final support line for now is at 0.8550, which saw a lot of action in mid-2010 and has remained intact since that time.

I  continue to be  bearish on AUD/USD.

AUD/USD continues to be a tale of two currencies. The Aussie  can’t seem to find its footing,  while the US  dollar has been looking strong.  Talk of tapering QE and solid US numbers, notably employment data, has seen the dollar improve against all the major currencies. We could see the Australian dollar break below the psychologically important 0.90 level.

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

Further reading: