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AUD/USD  lost over one cent last week, and the pair closed at 0.9229. This week’s highlight is  Private Capital Expenditure. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

The Australian dollar lost  one cent following the release of the RBA  minutes early last week. The central bank  set growth  projections would not be met  and that  interest rates would continue to remain at low levels.  In the US, the Federal Reserve minutes  indicated that  policymakers discussed QE exit strategies but didn’t reach any final decisions. Unemployment Claims missed expectations, while key housing data was mixed.

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AUD/USD graph with support and resistance lines on it. Click to enlarge:       AUDUSD Forecast May26-30

 

  1. MI Leading Index: Wednesday, 00:30. This index is based on  9 economic indicators, but is considered a minor event since most of the data has been previously released.  The index continues to post weak numbers, with a flat reading of 0.0% last month.
  2. Construction Work Done:  Wednesday, 1:30. This indicator is published every quarter, magnifying the impact of each release. The indicator did not look strong in Q4 of 2013, coming in at -1.0%. This was well short of the estimate of +0.4%. Another weak reading is expected for Q1, with the estimate standing at -0.3%.
  3. HIA New Home Sales: Thursday, Tentative. HIA New Home Sales tends to fluctuate, and the last release saw a paltry gain of just 0.2%, in sharp contrast to a strong gain a month earlier. Will the indicator improve in the upcoming release?
  4. Private Capital Expenditure: Thursday, 1:30. This is the key event of the week. The indicator is released every quarter, and sharp fluctuations have resulted in market estimates that are often well off the mark. The Q4 for 2013 release plunged 5.2%, much worse than the expected decline of 1.0%. Another decline is expected, with the estimate for Q1 standing at -1.6%.
  5. Private Sector Credit: Friday, 1:30. Analysts closely follow this indicator, as an increase in borrowing by the private sector usually translates into spending by consumers and businesses, which is a key engine of economic growth. The indicator has  been very steady, posting three consecutive gains of 0.4%. The same reading is  expected for the April reading.

*All times are GMT.

 

 

AUD/USD Technical Analysis

AUD/USD  opened the week at 0.9365 and  touched a high of 0.9366, unable to push past resistance at 0.9368 (discussed last week).  The pair then lost ground,  dipping to a low of 0.9209 and closing the week at 0.9229.

 

Technical lines from top to bottom:

We  start with resistance at 0.9794, which was last tested in June 2013.

There is resistance at the round number of 0.9700, which has held firm since October 2013.

0.9526 provided key resistance in November 2013 and has remained intact since that time.

0.9442  continues to hold firm. The line marked the high point of  the  pair in November, which saw the Aussie  go on a sharp slide and drop below the  0.89  line.

0.9368 was tested early in the week but held firm and has some breathing room as the pair lost ground.

0.9283 had served as an important  support line for much of May. It has  switched to a  resistance role following the Aussie’s slide last week.

0.9180 is  providing the pair with  support. It is not a strong line and could  see action early in the week.

The round number of 0.9000 is a key psychological level. It has remained intact since early March.

0.8893  is next. This line has remained intact since last March.

The final support level for now is 0.8728.  It  marks the low point of an Aussie  rally which began in early February and  saw the currency cross  above the 0.94 line.

 

I am  bearish on AUD/USD.

The Australian dollar took a hit from the RBA minutes, and the recent Australian austerity budget is also weighing on the currency. It’s a brighter picture in the US, as market sentiment remains positive about the US economy and the Federal Reserve is likely to continue its QE tapers.