AUD/USD Forecast Nov. 17-21

AUD/USD  bounced back  last week,  gaining close to 100 points. The pair closed  at 0.8736. This week has six events, led by the RBA minutes. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

US  job numbers were not as strong as the markets had expected.  Unemployment claims  missed expectations and JOLTS softened. Still, there was a silver lining as  the number of quits is back to pre-crisis levels, which shows that people are confident to switch jobs. Confidence is also apparent in the highest consumer confidence since 2007 and an improvement in retail sales.  In Australia, business confidence softened but consumer confidence posted a strong gain.

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

1. New Motor Vehicle Sales: Monday, 00:30. This is an important gauge of consumer spending, as cars and trucks are big-ticket items. After two consecutive declines, the indicator posted an excellent gain of 2.9% last month. The markets will be hoping for another strong reading in the upcoming release.
2. CB Leading Index: Monday, 23:00. The index is considered a minor event since most of the data has already been released. The index posted a decline of 0.2%  last month, its worst showing since October 2013.
3. Monetary Policy Meeting Minutes: Tuesday, 00:30. The markets will be  eager to review  the minutes of the RBA’s last meeting. At that time, the RBA noted that the drop in the value of the Aussie was a positive development and this will likely appear in the minutes, so AUD/USD could lose some ground.
4. RBA Governor Glenn Stevens Speaks: Tuesday, 8:25. Stevens will deliver remarks at an event in Melbourne. The markets will be looking for clues as to the RBA’s future monetary policy, and any surprise comments from the Governor could affect the movement of AUD/USD.
5. MI Leading Index: Tuesday, 23:30. This index is also a minor event which is unlikely to have much impact on AUD/USD. The index has been very steady, with  consecutive readings of -0.1%.  
6. Chinese HSBC Flash Manufacturing PMI: Thursday, 1:45. The Australian dollar is sensitive to key Chinese indicators, as the Asian giant is Australia’s number one trading partner. The index continues to hover just above the 50-point level, which separates between expansion and contraction.

* All times are GMT.

 

AUD/USD Technical Analysis

AUD/USD  started the week  at 0.8642  and  dropped to a low of 0.8587.  The pair then reversed directions,  climbing all the way to 0.8772, as  it tested resistance at 0.8750  (discussed last week). AUD/USD closed the week at 0.8736.

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

Technical  lines from top to bottom:

We  begin  with  resistance at 0.9270. This line supported the pair in August but reverted to resistance in September  with the Australian dollar sustaining steep losses.

0.9175  remains a strong resistance line. The round number of 0.9000  is next.

0.8898  continues to provide strong resistance.

0.8750  was tested as the Aussie posted strong gains. It  is currently an  immediate resistance line and could see action during the week.

0.8660 was  easily breached by the pair and has switched to a  support role.

0.8550  has strengthened in support as AUD/USD trades at higher levels.

0.8316 marked the start low point of a US dollar rally in July 2010, which saw the greenback climb above the 1.10 level.

0.8150 is our final support line for now. It has remained intact since September 2007.

I  am  bearish  on AUD/USD.

US numbers remain strong, led by solid consumer spending and confidence numbers. Employment numbers hit some turbulence last week, but the labor market remains healthy. The Australian economy has not been able to keep pace and the US dollar could bounce back and recover from last week’s losses. Much will depend on how the markets react to the RBA minutes.

In our latest podcast, we dive into Australia, analyze the US jobs picture, talk about the punished pound and discuss the collapsing yen: