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AUD/USD  was almost unchanged over the course of  the past  week.  The pair  closed at 0.9465. This week’s highlight is  Monetary Policy Meeting Minutes and there are several key Chinese  events as well.  Here is an outlook of the events and an updated technical analysis for AUD/USD.

Both the US and Australia posted weak data last week. Australian consumer  sentiment and employment change disappointed, while in the US consumer confidence looked weak and the political crisis in Washington continues to simmer.

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AUD/USD graph with support and resistance lines on it. Click to enlarge:   AUD USD Outlook Oct. 14-18th

  1. Home Loans: Monday, 00:30. Home Loans provides a snapshot of the health of the housing industry as well as that of consumer spending. The indicator has posted gains above 2% in the past two releases, but the markets are expecting a sharp decline of -2.1% in September.
  2. Chinese CPI:  Monday, 1:30.  This  key indicator has been fairly steady, and last month’s reading came in at 2.6%. The markets are expecting an increase, with an estimate of 2.8%.
  3. RBA Monetary Policy Meeting Minutes:  Tuesday, 00:30. Analysts will be carefully combing through the minutes of the RBA’s most recent policy meeting. The RBA has hinted that it will not be reducing rates before next year, and the minutes could help shed light on the RBA’s take on the health of the Australian economy and its views on the level of the Australian dollar.
  4. New Motor Vehicle Sales:  Tuesday, 00:30. This important consumer spending indicator tends to fluctuate. After a sharp drop in August, the indicator posted a modest gain on 0.8%. Will we see another gain this month?
  5. MI Leading Index:  Tuesday, 23:30. The index is based on 9 economic indicators, but is considered a minor release since most of the data has already been released.
  6. NAB Quarterly Business Confidence:  Thursday, 00:30. This indicator is released each quarter, magnifying its impact. The indicator has looked sluggish, as six of the past seven quarters have been below the zero level, indicating pessimism. The markets will be hoping that the upcoming release will be in positive territory.
  7. RBA Governor Glenn Stevens Speaks:  Friday, 1:00. Stevens will deliver remarks at the Australian British Chamber of Commerce Business Lunch in Sydney. The governor has made remarks in the past which have moved the markets, and analysts will be looking for any clues as to the RBA’s plans regarding interest rates.
  8. Chinese  GDP:  Friday, 2:00. Chinese key releases should be treated as market-movers, since China is Australia’s number one trading partner. Chinese GDP has been dropping in recent releases, and hit 7.5% in August, missing the estimate of 7.7%. The markets are expecting GDP to jump to 7.8% in the September release.
  9. Chinese Industrial Production:  Friday, 2:00. Industrial Production has been improving and hit 10.4% in August, a sixteen-month high. The estimate for the upcoming reading is lower, at 10.1%.

* All times are GMT

AUD/USD Technical Analysis

AUD/USD  started the week at 0.9441 and  dropped to a low  of 0.9388, breaking through support at 0.9428 (discussed last week). The pair then  rebounded and touched a high  of 0.9484, breaking past support at 0.9428. The pair closed the week at 0.9465.

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


Technical lines from top to bottom:      

We  start with resistance at 0.9961. This line is protecting the critical parity line. This is followed by resistance at 0.9828.

The line of 0.9751  provided  key resistance in early June and has held firm since that time.

0.9670 was a cap for the pair in late May and continues to provide strong resistance.

0.9556 has provided resistance since mid-June. At that time, AUD/USD went on a downward spiral that saw it drop below the 0.92 line.

0.9428 was breached  as the pair posted  strong gains and  has reverted to a support role. It remains a weak  line  and could see activity early this week.

0.9283  saw  a lot of action in  the months of June and  July, alternating between resistance and support roles. It is providing the pair with strong support.

0.9180 is the next support level. This is followed by the  round number of 0.90.  This psychologically important  level was breached in early September, when the Australian dollar started a strong rally which saw it break past the 0.95 line.

The final line for now is 0.8893.  This  has been a strong support line since August 2010,  when  the Australian dollar put together a strong  rally which saw it  climb  above the 1.10 line.

I  am  bearish on AUD/USD.

The risky Aussie could run into some turbulence this week, as the political crisis in Washington intensifies. With the US shutdown continuing and the debt ceiling looming, we can expect some volatility in the markets, and nervous investors could dump their Australian dollars in favor of the safe-haven US dollar.

The Aussie sometimes moves in tandem with gold. You can trade binary options on gold using this technical analysis.

Further reading: