US job numbers were solid last week. Non-Farm Payrolls were upbeat and wage growth improving to 0.3%, above the estimate of 0.2%. The Fed refrained from raising rates last week, but the policy statement was slightly hawkish, as the Fed gave a thumbs-up to the economy, noting that inflation was moving closer to the Fed inflation target of 2.0%. As expected, the RBA maintained rates at 1.50%.
[do action=”autoupdate” tag=”AUDUSDUpdate”/]AUD/USD gained 60 points last week, as the pair closed at the 0.7660 line. There are 8 events this week. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.
AUD/USD graph with support and resistance lines on it. Click to enlarge:
- AIG Construction Index: Sunday, 22:30. The construction indicator improved to 51.4 in September, compared to 46.6 points in August. Will the upward swing continue in October?
- ANZ Job Advertisements: Monday, 00:30. This employment indicator declined 0.3% in September, well of the August pace of a 1.8% gain. The markets are hoping for a positive reading in August.
- NAB Business Confidence: Tuesday, 00:30. The indicator has shown solid growth in the past two months, with readings of +6 points. This monthly release does not have as much impact as the quarterly release, which also came in at +6 points in the third quarter.
- Chinese Trade Balance: Tuesday, Tentative. Key Chinese indicators can have a significant impact on the Australian dollar, as China is Australia’s largest trading partner. China’s trade surplus sagged in September to $278 billion, well off the forecast of $365 billion. The indicator is expecting a strong turnaround in October, with an estimate of $366 billion.
- Westpac Consumer Sentiment: Tuesday, 23:30. An improvement in consumer confidence often translates into stronger consumer spending, which is critical for economic growth. In September, the indicator gained 1.1%.
- MI Inflation Expectations: Thursday, 00:00. This indicator helps analysts predict actual inflation levels. The indicator improved to 3.7% in September, marking a 4-month high.
- Home Loans: Thursday, 00:30. Home Loans provides a snapshot of the level of activity in the housing sector. The indicator has struggled, posting three declines in the past four releases. Another decline is expected in the September reading, with an estimate of -1.5%.
- RBA Assistant Governor Guy Debelle Speaks: Friday, 1:00. Debelle will speak at an event in Melbourne. The markets will be looking for clues regarding the RBA’s future monetary policy.
AUD/USD Technical Analysis
AUD/USD opened the week at 0.7595 and quickly touched a low of 0.7582. The pair then reversed directions and climbed to a high of 0.7697, testing resistance at 0.7691 (discussed last week). AUD/USD closed the week at 0.7661.
Live chart of AUD/USD:
Technical lines from top to bottom:
We start with resistance at 0.8066.
0.7938 is next.
0.7835 has held firm since April.
0.7691 was a cap for much of October.
0.7597 remains busy and is currently a weak support level.
0.7513 is a weak support level.
0.7427 marked the low point for the month of September.
0.7334 was a cap in December 2015.
0.7194 is the final support line for now.
I remain bearish on AUD/USD
The US economy continues to move in the right direction, buoyed a very strong labor market. With the Fed expected to raise rates in December, market sentiment is positive towards the US dollar.
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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 the Canadian dollar (loonie), check out the Canadian dollar forecast.
- For the kiwi, see the NZD/USD forecast.
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