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AUD/USD  lost about 130 points  last week,  as the pair closed  at 0.8622. The Aussie played catch up with its peers after showing resilience beforehand. The upcoming week is busy,with many events to move the A$. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

Last week’s US job numbers were not as strong as hoped, as US Nonfarm Payrolls slipped to 214 thousand, well short of the estimate of 235 thousand. On a brighter note, the Unemployment Rate slipped to 5.8%, its lowest level in six years. In Australia, Retail Sales and employment numbers were strong, but this wasn’t enough to prop up the shaky Australian dollar.

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

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

AUDUSDForecast Nov.10-14.

  1. Home Loans: Monday, 00:30. Home Loans disappointed with a reading of -0.9% last month, marking its first decline in five   months.  The markets had expected a slight gain of 0.2%. Another decline is expected in the upcoming release, with an estimate of -0.3%.
  2. Chinese CPI: Monday, 1:30. The Aussie is sensitive to key Chinese releases, as China is Australia’s number one trading partner. CPI has been steadily losing ground since May, and dropped to 1.6% last month. No change is expected in the October release.
  3. NAB Business Confidence: Tuesday, 00:30.  This is the key event of the week. Then indicator slipped to 5 points last month, its lowest level since March. Business confidence usually translates into stronger spending and hiring. Will the indicator turn around and improve this month?
  4. HPI: Tuesday, 00:30. This house inflation index, released quarterly, is an important gauge of activity in the housing sector. The index posted a gain of 1.8% in Q2, well above the estimate of 1.1%. The forecast for the upcoming release stands at 1.6%.
  5. Westpac Consumer Sentiment: Tuesday, 23:30. The indicator posted a modest gain of 0.9%, bouncing back from a weak reading of -4.6%. A strong reading could help the Aussie move higher.
  6. Wage Price Index: Wednesday, 00:30. The index is released each quarter, magnifying the impact of every release. The indicator has been fairly steady, posting a gain of 0.6% in Q2. No change is expected in the Q3 reading.
  7. MI Inflation Expectations: Thursday, 00:00. Analysts rely on this indicator to help track actual inflation trends. The indicator showed little change last month, posting a strong gain of 3.4%. The markets are not expecting a significant change in the upcoming release.
  8.  RBA Assistant Governor Christopher Kent Speaks: Thursday, 1:30. Kent will deliver  remarks at an event in Sydney.  A  speech  that  is more hawkish than expected  is bullish for the Australian dollar.
  9. Chinese Industrial Production: Thursday, 5:30. The indicator jumped to 8.0% in the October release, compared to just 6.9% a month earlier. No change is expected in this month’s reading.

* All times are GMT.

AUD/USD Technical Analysis

AUD/USD  started the week  at 0.8752  and touched a high of 0.8762. The pair then dropped  to a low of  0.8547,  breaking below support  at 0.8750 (discussed last week). AUD/USD closed the week at 0.8622.

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

Technical  lines from top to bottom:

We  start  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.

0.8891  continues to provide strong resistance.

0.8750  has switched to a resistance line as the Aussie posted sharp losses. It is a strong line.

AUD/USD broke through support at 0.8660, which has also reverted to a resistance role.

0.8550  was breached for the first time since  December 2007. It subsequently recovered and is an immediate support level.

0.8316 marked the start low point of a US dollar rally 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.

With QE finally over and done with, the focus now shifts to an interest rate hike. The US economy continues to improve and wages could move upwards, which will put pressure on the Fed to raise interest rates. The Australian dollar had a rough week and the downward trend could continue if business and consumer sentiment numbers fail to meet expectations.

In our latest podcast, we run down the ECB, talk about the huge Japanese move, preview the UK and also talk about Brazil:

Download it directly here.

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Further reading: