AUD/USD posted modest losses last week and closed just above the 0.72 line. This week’s key event is CPI. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.
The US dollar received some support last week from positive US data, as home sales and jobless claims beat their estimates. Chinese GDP edged lower to 6.9%, but the Australian dollar emerged unscathed, as this figure was higher than the estimate of 6.8%. The Australian dollar tried to move higher, but Friday’s rate cut in China and Draghi’s dovish tone turned into a USD rally and this left the Aussie on the back foot.
[do action=”autoupdate” tag=”AUDUSDUpdate”/]AUD/USD graph with support and resistance lines on it. Click to enlarge:
- CPI: Wednesday, 00:30. The week kicks off with CPI, the primary gauge of consumer inflation. The index posted a gain of 0.7% in Q2, within expectations. The forecast for Q3 stands at 0.7%.
- Trimmed Mean CPI: Wednesday, 00:30. This index excludes the most volatile items which make up CPI. In Q2, the index posted a gain of 0.6%, matching the forecast. The markets are expecting a gain of 0.5% in the Q3 report.
- HIA New Home Sales: Thursday, 00:00. This indicator provides a snapshot of the level of activity in the housing sector. After a decline in July, the indicator posted a strong gain of 2.3% in August. Will the indicator repeat with another solid reading in September?
- Import Prices: Thursday, 00:30. This is an important indicator, as it is closely linked to inflation levels. The indicator posted a strong gain of 1.4% in Q2, its best performance since Q1 in 2014. The markets are anticipating another strong gain in Q3, with an estimate of 1.6%.
- PPI: Friday, 00:30. PPI measures inflation in the manufacturing sector. The index posted a gain of 0.3% in Q2, which was within expectations.
* All times are GMT.
AUD/USD Technical Analysis
AUD/USD started the week at 0.7259 and climbed to a high of 0.7307. The pair then reversed directions and dropped to a low of 0.7177, breaking through support at 0.7213 (discussed last week). The pair closed at 0.7209.
Live chart of AUD/USD: [do action=”tradingviews” pair=”AUDUSD” interval=”60″/]
Technical lines from top to bottom:
0.7664 is a strong resistance line.
0.7440 capped the pair back in August, and remains key resistance.
0.7284 is a clear separator of ranges, also seen around the same time, and is also stronger.
0.7213 has switched to a resistance role as the pair posted losses last week. It is a weak line, and could see further action early this week.
0.7160 is an immediate support level.
0.71 is the next support line.
The very round level of 0.70 worked as a cushion in August and is under strong pressure.
The round level of 0.69 is the next support line.
0.6775 is the final support level for now.
I am bearish on AUD/USD
Although the Fed stayed on the sidelines in September, a rate hike is still a possibility before the end of the year. Monetary divergence clearly favors the US dollar, and the Australian economy continues to struggle with weaker demand from China, Australia’s largest trade partner.
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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.