AUD/USD Forecast June 10-14

The Australian dollar  continued its losing ways, dropping over a cent against the US dollar last week. AUD/USD closed the week at 0.9495. This week’s major event is Employment Change.  Here is an outlook of the events and an updated technical analysis for AUD/USD.

Australian Retail Sales and GDP missed their estimates, and the RBA didn’t do the Aussie any favors by leaving the door open to more rate cuts. As well, Chinese manufacturing numbers and trade balance were below their estimates,  which hurt the Australian dollar.

Updates:

• AUD/USD opens the week with a big Sunday gap lower on the Chinese data, and dips below 0.94. The bottom so far is 0.9393, just 5 pips from critical support. It is important to note that it is a holiday in Australia, so liquidity is low.
• S&P changed the credit outlook for the US from negative to stable. This helped the US dollar and limited the Aussie’s recovery.
• Updated technical analysis:  AUD/USD Pauses Plunge at Major Support
• AUD/USD dips to near 3 year low – The Aussie was hit by more weak estimates and dropped to 0.9381 before bouncing back. A false break? Confirmation still waiting. Here are 7 reasons for the fall.
• Home Loans fell to 0.8%, well below the estimate of 2.1%. NAB Business Confidence came in at -1 point, indicating pessimism about business conditions in the Australian economy.
• AUD/USD has dropped to the 94 level. The pair is close to 3-year lows and is approaching new support levels.
• The pair recovered very nicely – is it a hammer pattern? – This already happened in the past. It already crossed 0.9450.
• The Australian dollar continues recovering: AUD/USD closed the gap and is hammering higher – a hammer pattern is forming on the weekly chart.
• AUD/USD finds it hard to hold up, and slips back to around 0.95.
• The big event of the week is the release of employment data.  See how to trade the Australian employment change with AUD/USD.
• Employment Change couldn’t match last month’s outstanding numbers, but stayed in positive territory, posting a modest gain of 1.1 thousand. The estimate stood at -9.8 thousand. The Unemployment Rate remain unchanged at 5.5%, a bit  better than the estimate of 5.6%.
• AUD/USD edged higher on the solid employment numbers, and is close to the 0.95 line.
• The Australian dollar continued recovering and regained the 0.96 level. The pair is about to close the week in a hammer pattern, that represents a big upwards correction.
• Updated technical analysis:  AUD/USD Bullish Correction within Strong Bearish Trend

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

1. Home Loans: Tuesday, 1:30. Home Loans is an important leading indicator of demand in the Australian housing market. The indicator has posted two consecutive gains, and the markets are expecting another rise, with the estimate for the June release at 2.1%.
2. NAB Business Confidence: Tuesday, 1:30. This index pointed to worsening economic conditions in the May release, with a reading of -2 points. This was the lowest level from the business sentiment indicator in 2013. The markets will be hoping for a rebound back into positive territory this time around.
3. Westpac Consumer Sentiment:  Wednesday, 00:30. Consumer Confidence has not impressed, with two consecutive declines. The economy will have a tough time recovering if consumers don’t feel good about the economy and loosen the purse strings, as consumer spending is a critical component of economic growth. Will the indicator bounce back in the upcoming reading?
4. MI Inflation Expectations: Thursday, 1:00. This indicator is released monthly. It  helps analysts track inflation, as CPI, the most important consumer inflation indicator, is only released each quarter. The indicator has been  quite steady,  and the previous reading moved only slightly, to 2.3%. The markets are  not expecting  any significant change in  the upcoming reading.
5. Employment Change and Unemployment Rate:  Thursday, 1:30. Employment Change is one of the most important economic indicators, and can affect the movement of AUD/USD. The May release was excellent, with an increase of 50.1 thousand. This easily surpassed the estimate of 11.5 thousand. However, the markets are bracing for a sharp turnaround, with an estimate at -9.8K. Will the indicator again surprise the markets with a strong release? The Unemployment Rate is at a respectable 5.5%, and the markets are anticipating a slight  rise to 5.6%.

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

AUD/USD Technical Analysis

AUD/USD opened at 0.9619, and started off promisingly, touching a high of 0.9792. The pair was unable to break resistance at 0.9797 (discussed last week). AUD/USD then dropped sharply, falling to 0.9428, and closed the week at  just under the 95 level, at 0.9495.  

Technical lines from top to bottom:      

We  begin with strong resistance at  1.0183. This line last saw action in  early  May.  The next line of resistance is at 1.0093. This is followed by the parity line, which AUD/USD  broke through  in mid-May, as it continues to push to lower levels.

The next resistance line is at 0.9913. This is followed by 0.9797, which held firm as the pair pushed upwards early last week.  The next  resistance line is at 0.9634. This line has strengthened as the pair continues to lose ground. 0.9549 has reverted to a resistance role following the sharp drop by AUD/USD.

AUD/USD is receiving  support at 0.9405, which is protecting the 94 level. This line has remained intact since October 2011.  Below is 0.9275, which has not been tested since September 2010. This is followed by support at 0.9171. Next, there is support at 0.9041, protecting the all-important 90 level. The final support line for now is at 0.8893.

I  continue to be  bearish on AUD/USD.

The Aussie’s troubles show no sign of letting up, as the currency  continues to lose ground to the  US dollar.   AUD/USD  lost a remarkable eight  cents in May, and the southward journey has continued in June. As well, Chinese data has not looked sharp, and this has weighed on the Aussie.

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

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 the Japanese yen, read the USD/JPY forecast.
• For GBP/USD (cable), look into the British Pound forecast.
• For USD/CAD (loonie), check out the Canadian dollar forecast.