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AUD/USD  showed some strength during the week but couldn’t consolidate the gains and ended the week almost unchanged,  AUD/USD closed the week at 0.7613.  It’s a busy week ahead, with 10 events on the calendar.  Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

The US posted an  excellent NFP report, but PMI releases were a mix. In Australia, Building approvals suffered a sharp decline while a strong GDP gave the Aussie a brief boost. The RBA left its policy  unchanged and didn’t offer new hints.

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

AUD_USD_Forecast.June8-12

  1. Chinese Trade Balance: Monday, Tentative.  The Aussie is sensitive to key Chinese data such as PMIs, as China is Australia’s number one trading partner. The indicator rebounded in March with a surplus of $34.1 billion, within expectations. The upward trend is expected to continue
  2. NAB Business Confidence: Tuesday, 1:30. The indicator has been steady, with readings of 3 points in three of the past four readings. A reading above zero indicates improving conditions.
  3. ANZ Job Advertisements: Tuesday, 1:30. This indicator provides a snapshot of the level of activity on the employment front. The indicator bounced back in the April release, posting a strong gain of 2.3%. This marked a 10-month high. Will the upswing continue in the May report?
  4. Home Loans: Tuesday, 1:30.  Home Loans improved to 1.6% in March, beating the forecast of 1.1%. However, the markets are bracing for a sharp downturn in the April report, with the estimate standing at -1.8%.
  5. Chinese CPI: Tuesday, 1:30. Analysts closely monitor inflation in China, the world’s second largest economy. The index has been steady in recent readings, and gained 1.6% in April, within expectations. The estimate for the May report stands at 1.3%.
  6. Westpac Consumer Sentiment: Wednesday, 00:30. This important consumer indicator has shown strong volatility. After two declines, the indicator posted an impressive gain of 6.4%. Will we also see a strong reading in May?
  7. RBA Governor Glenn Stevens Speaks: Wednesday, 2:50. Stevens is expected to speak at an economic forum in Melbourne. Analysts will be looking for any hints regarding future interest rate policy.
  8. MI Inflation Expectations: Thursday, 1:00. This indicator helps analysts track consumer inflation on a monthly basis, as CPI, the primary gauge of consumer inflation, is only issued each quarter. The indicator  has been improving in recent readings, and posted a gain of 3.6% in the April report.
  9. Employment Change: Thursday, 1:30.  Employment Change is the key event of the week, and an unexpected reading can quickly affect the movement of AUD/USD. The indicator disappointed in April, posting a decline of -2.9 thousand. This was well short of the modest estimate of 4.5 thousand. The markets are expecting a sharp turnaround in the April reading, with an estimate of 15.2 thousand. Will the indicator match or beat this prediction?  The unemployment rate is expected to remain unchanged at 6.2%.
  10. Chinese Industrial Production: Thursday, 5:30. This is a key manufacturing indicator. In April, the indicator improved to 5.9%, close to the estimate of 6.1%. Little change is expected in the upcoming release.

* All times are GMT.

AUD/USD Technical Analysis

AUD/USD started the week at 0.7641 and reached a high of 0.7819. The pair then dropped sharply, touching a low of 0.7597, and testing support at 0.7601 (discussed last week).  The pair  closed the week at 0.7613.

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

Technical lines from top to bottom:

0.8077 was an important resistance line in January.

0.7978 is the next line of resistance.

0.7901 was an important cap in March.

The pair tested resistance at 0.7798 as the Aussie showed some strength but was unable to consolidate.

0.7692 is an immediate resistance line.

0.7601 is providing weak support. It could see more action early in the week.

0.7528 is the next support level.

0.7403 has  remained intact  since May 2009. At that time, the Aussie was in the midst of a rally which saw it climb above the 0.94 line.

The final support line for now is 0.7283.

I  am  bearish on AUD/USD.

The struggling Aussie managed to hold its own last week against the greenback, but US numbers are improving and the Fed is expected to give the green light to a rate hike in September. These factors will continue to put pressure on the Australian currency.

In this week’s podcast, we explain why EUR rallied on Draghi, what’s next, discuss oil and gas, run through the Plus500 story and preview next week’s events.

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Further reading: