AUD/USD Forecast – November 30 – December 4

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The Aussie was hit quite hard by the Dubai crisis, but didn’t fall to much. The upcoming week’s rate decision is expected to contain a third consecutive rate hike. 9 other events will impact the Australian dollar. Here’s an outlook on the major events that will move the Aussie, and an updated technical analysis for AUD/USD.

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

The Aussie enjoyed good construction figures and hawkish comments by Ric Battellino, but suffered from bad private expenditure data and the Dubai crisis of course. It showed some weakness already last week, as it left the strict trading range earlier than other currencies. Apart from the rate decision, building approvals and retail sales will stand out. Let’s review the events. The technical analysis will follow:

1. MI Inflation Gauge: The Melbourne Institute has shown that Australian prices are rushing. This index, similar to the CPI, hasn’t risen in the past three months. An unchanged figure is expected this time. This figure is published early in the week: Sunday at 23:30 GMT.
2. Private Sector Credit: Growth in credit means more spending and more stimulus activity in the economy. After three months of rise, the private sector credit in Australia has fallen by 0.2% last month. A return to growth is expected this time – by 0.2%. Published on Monday at 00:30 GMT.
3. Company Operating Profits: Profits by corporations mean more investment back in the economy. This quarterly indicator has been falling in the past 3 quarters, showing that corporations are suffering from the global crisis. Q3 figures are expected to show  growth  in profits – by a small 0.1%, but this still marks an end to corporation recession. Published on Monday at 00:30 GMT.
4. AIG Manufacturing Index: The Australian Industry Group (not to be confused with the American firm), published its own purchasing managers’ index every month. The one related to the manufacturing sector is predicted to remain stable, after dropping last month slightly from 52 to 51.7 points. All in all, a fourth month of expansion is expected. Published on Monday at 22:30 GMT.
5. HIA New Home Sales: The Australian Housing Industry Association has shown that sales of new hoses have fallen last month by 4.5%. This time, prices are expected to be on the rise again, as they did in previous months. This housing sector figure’s exact release time isn’t known at the moment, but it will be during Monday.
6. Building Approvals: This important housing indicator is becoming more stable in recent months, after being very shaky. The 2.7% rise from last month is expected to be followed by a neat 2.1% rise this time. Published on Tuesday at 00:30 GMT, before the rate decision.
7. Rate decision: Australia’s central bank is expected to raise the Cash Rate  for a third month in a row. Glenn Stevens was the first, and currently the only man to raise interest rates in the West. He’s is expected to move it another 0.25% higher, to 3.75%. At first there were doubts if another hike is expected, but recent comments, especially by the RBA’s Ric Battellino, make economists quite certain that another hike is predicted. The RBA Rate Statement will hint about future policy. Published on Tuesday at 3:30 GMT. Will another country join Australia in rate hikes?
8. Commodity Prices: Australia’s  commodity-oriented economy is sensitive to commodity prices. Half of the country’s exports are commodities. The average selling price fell by 31% in comparison to the same month in 2008. A smaller fall is expected now. Published on Tuesday at 5:30 GMT.
9. AIG Services Index: This figure complements the manufacturing number from Monday. The services sector is less stable: the index passed the 50 mark last month after three months below it – meaning contraction. The 54.8 point score from last month is expected to be followed by a similar number this time. Published on Wednesday at 22:30 GMT.
10. Retail Sales: This is one of the most important economic indicators in any country as it touches consumers. Australia’s retail sales have been going up and down in previous months, disappointing last month with a 0.2% fall. This time, retail sales are predicted to rise by 0.4%. Sales should reflect the rise in jobs. Published on Thursday at 00:30 GMT.

AUD/USD Technical Analysis

The Aussie didn’t reach new highs this week – only made it to 0.9322. It was then badly hurt by the Dubai crisis and fell all the way to the 0.8950 support line, that was temporarily broken a few weeks ago. It closed at 0.9060, a support line that appeared in last week’s AUD/USD outlook, and is now erased.

Looking up, 0.9210 continues to serve as a minor resistance line. Higher, 0.9322, the past week’s peak, is the next resistance line. It was a peak also during October. Higher above, 0.94 is the YTD high, and serves as a major resistance.

Looking down, 0.8950 was tested again this week. On its way up in October, the Aussie bounced off this line. It’s a very strong support line. Further below, 0.85 capped the Aussie during the summer, and is distant support line.

My sentiment remain bullish on the Aussie.

The strong Australian economy, boosted by rising rates, should overcome the global fear and continue upwards, despite the blow it got in the Dubai crisis.

Further reading:

• For a broad view of the week’s major events, check out the  Weekly forex forecast.
• For the beaten British Pound, look into the  GBP/USD forecast.
• For USD/CAD, read the  Canadian dollar forecast.
• For the EUR/USD, read the  EUR USD forecast.

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