AUD/USD Forecast Nov. 9-13

AUD/USD  posted losses for a  fourth straight week, losing  100 points.  The pair closed at 0.7035. This week’s key events include NAB Business Confidence and Employment Change.  Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

The US dollar was broadly higher following the  Non-Farm Payrolls report, which  more than beat expectations, with 271K jobs gained and a 2.5% y/y gain in wages. This  outstanding release  points to a  strong labor market, and  certainly keeps the December rate hike option wide open. The RBA kept rates at 2.00%, but noted that a rate cut remains on the table.

 

[do action=”autoupdate” tag=”AUDUSDUpdate”/]

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

 

1. Chinese Trade Balance: Sunday, 2:09. The Australian dollar is sensitive to key Chinese releases such as Trade Balance, as China is Australia’s number one trading partner. The trade surplus rose to $393 billion in October, easily beating the estimate of $367 billion.
2. ANZ Job Advertisements: Monday, 00:30. This indicator provides a snapshot of the strength of the labor market. In September, the indicator jumped 3.9%, its biggest gain since June 2014. This marked the indicator’ third gain in four months.
3. NAB Business Confidence: Tuesday, 00:30. This indicator, released monthly, is a key event. The indicator posted a strong improvement in September, rising to 5 points. Will the upward trend continue in the October report?
4. Home Loans: Tuesday, 00:30. Home Loans provides a snapshot of the level of activity in the housing sector. The indicator posted a strong gain of 2.9%, but this was well short of the estimate of 4.9%.
5. Chinese CPI: Tuesday, 1:30. Chinese CPI dipped to 1.6% in September, shy of the estimate of 1.8%. The downward trend is expected to continue in the October report, with an estimate of 1.5%.
6. Westpac Consumer Sentiment: Tuesday, 23:30. Analysts keep a close eye on  consumer confidence indicators, as consumer confidence often translates into consumer spending, a key driver of  economic growth. The indicator rebounded in October, with a strong gain of 4.2%.
7. Chinese Industrial Production: Wednesday, 5:30. The indicator dropped to 5.7% in October, compared to 6.1% a month earlier. This reading also missed the estimate of 6.o%. The markets are expecting more of the same, with an estimate of 5.8%.
8. MI Inflation Expectations: Thursday, 00:00. This indicator helps analysts predict actual inflation readings. The indicator improved in September, rising to 3.5%.
9. Employment Change: Thursday, 00:30. Employment Change is one of the most important economic indicators, and can have an immediate impact on the movement of AUD/USD. The indicator surprised with a decline in September, marking the first decline since April. The markets are expecting a strong turnaround, with a forecast of 15.2 thousand. The unemployment rate is expected to remain steady at 6.2%.

* All times are GMT.

AUD/USD Technical Analysis

AUD/USD started the week at 0.7133 and  climbed to a high of 0.7224. The pair then reversed directions sharply  and dropped to a low of 0.7022,  as  support  held firm at 0.7000  (discussed last week).  The pair  closed at 0.7035.

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

Technical lines from top to bottom:

With the pair posting sharp losses, we start from lower levels:

0.7440 capped the pair back in August, and remains key resistance.

0.7284 is the next resistance line.

0.7160 has switched to a resistance role and is a weak line.

The round number of 0.7100 is providing support.

The very round level of 0.70 worked as a cushion in August and is the next support level.

0.69 has provided support since September.

0.6775 has provided support since March 2009.

The final support line for now is 0.6623.

 

I  am  bearish  on AUD/USD

The US posted an excellent NFP release on Friday,  meaning  that a  Fed rate hike is more likely in December. This is a positive   development for the US dollar, and the  Australian dollar, which has lost some 350 points in the past month, will have a tough time stemming the US dollar rally.

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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.