AUD/USD continues to move upwards, and climbed close to one cent last week. There are just four releases in the upcoming week. Here is an outlook of the events and an updated technical analysis for AUD/USD.
Australian data was rather uneventful last week, but the Aussie did benefit from the Cyprus crisis, as nervous investors looked to move away from the euro. The Australian currency was also helped by positive Chinese manufacturing data, indicating more demand by the Asian giant for Australian exports.
Updates: RBA Governor Glenn Stevens spoke at a financial forum in Sydney. The RBA released its RBA Financial Stability Review, which issued twice a year. The RBA expressed concern about the Cyprus crisis and its effect on global markets, and reiterated that the strong Australian dollar was having a negative impact on the country’s business sector. MI Inflation Gauge will be released later on Wednesday. AUD/USD was trading at 1.0437. Mi Inflation Gauge climbed to 0.2%. Private Sector Credit showed no change, also rising 0.2%. This was shy of the estimate of 0.3%. The markets will be closed on Thursday, which is a bank holiday in Australia.
- RBA Governor Glenn Stevens Speaks: Tuesday, 4:45. Governor Stevens will address a financial forum in Sydney. A speech which is more hawkish than expected is bullish for the Australian dollar.
- RBA Financial Stability Review: Wednesday, 00:30. The RBA releases this report on a quarterly basis. The report looks at the strengths and weaknesses of the financial system, and analysts look for hints as to the RBA’s future monetary policy.
- MI Inflation Gauge: Wednesday, 23:30. This consumer inflation indicator is released monthly, which is useful to analysts as CPI is only published each quarter. The indicator has been dropping in recent releases, and came in at a flat 0.0% in the previous reading. Will Inflation Gauge bounce back into positive territory in the upcoming release?
- Private Sector Credit: Thursday, 00:30. Private Sector Credit measures the change in new credit provided to consumers and businesses. An increase in demand for credit means that there is more borrowing and spending, which is critical for economic growth. In February, the indicator rose a modest 0.2%, just shy of the estimate of 0.3%. The forecast for March remains at 0.3%.
AUD/USD Technical Analysis
AUD/USD opened at 1.0353 and touched a low of 1.0344, briefly dipping below support at 1.0371 (discussed last week). It was all uphill after that, as the pair pushing up to 1.0460, and closed at 1.0443, as the Aussie posted gains for the second straight week.
Technical lines from top to bottom:
We start with resistance at 1.1012. This is followed by 1.0888, which has held firm since August 2011. Next, there is resistance at 1.0789. We next encounter resistance at 1.0739. This line has remained intact, since March 2012, when the Australian dollar started a steep drop which saw it fall below the 0.96 level. The is followed by 1.0605. The pair has not tested this line since September. Below, there is resistance at 1.0508. This line was breached in January, when the Aussie commenced a downward trend from which has not fully recovered.
AUD/USD is receiving support at 1.0418. This line was in a resistance role until it was breached by the improving Australian dollar. Next, there is support at 1.0371. This is followed by 1.0326, which has strengthened as the pair trades at higher levels. Next, there is support at 1.0260. Below, the pair is receiving support at 1.0174. This line has held steady since early March. We next encounter support at the line of 1.0080, which is protecting the parity level. This is followed by support at the parity line, which has held steady since June and is a psychologically significant barrier. The final support level for now is at 0.9917.
I am neutral on AUD/USD.
AUD/USD continues to push higher, as the Cyprus crisis has weighed on the euro and made the Australian dollar more attractive to investors looking to park funds. As well,the Australian economy is stable, and posted strong employment numbers earlier this month. Will the Aussie continue its strong upward momentum? With only a handful of Australian releases this week, much will depend on what happens in Cyprus as well as US key releases.
The Aussie sometimes moves in tandem with gold. You can trade binary options on gold using this technical analysis.
- For a broad view of all the week’s major events worldwide, read the USD outlook.
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