AUD/USD Forecast Oct. 6-10

The Australian dollar continues to lose ground, as AUD/USD  lost  about 70 points last week, closing at 0.8663. The pair  dipped below  the 0.8650 line, its lowest level in over four years. This week’s major events are the Cash Rate and Employment Change. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

The US dollar received a boost from an excellent Nonfarm Payrolls late in the week. Australian data was a mix, as Retail Sales dipped, while Building Approvals posted a strong gain.

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

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

1. MI Inflation Gauge: Sunday, 23:30. This minor event helps analysts track inflation on a  monthly basis, as  Australia releases CPI each  quarter. The index has been sluggish, posting  0.0% in two of  the past three readings.
2. ANZ Job Advertisements: Monday, 00:30. Job Advertisements helps gauge demand and activity in the employment sector. The indicator looked solid last month, posting a gain of 1.5%. It precedes Employment Change, which will be released later in the week.
3. AIG  Construction Index: Tuesday, 22:30. The index continues to move upwards, and is pointing to expansion in the construction industry. The indicator climbed to 55 points last month, its highest level since November. Will the upward trend continue?
4. Cash Rate: Tuesday, 3:30.  The RBA’s benchmark interest rate has held steady at 2.50% for over two years and no change is expected in the October Rate Statement.
5. Employment Change: Thursday, 00:30. Employment Change is one of the most important economic releases and should be treated as a market-mover. Last month, the indicator surged by  a record  121.0 thousand. However, the markets are bracing for a decline this time around, with the estimate standing at -29.6 thousand. Will the indicator surprise and beat the forecast? The unemployment rate is expected to rise to 6.2%, up from 6.1% a month earlier.
6. Home Loans: Friday, 00:30. Home Loans is an excellent gauge of demand in the housing sector. The indicator edged up to 0.3%, last month, a 5-month high. However, this was well short of the estimate of 1.1%. Little change is expected in the  September release.
7. RBA Assistant Governor Malcolm Edey Speaks: Friday, 12:45. Edey will speak at a conference  in Sydney. Remarks which are more hawkish than expected is bullish for the Australian dollar.

* All times are GMT.

AUD/USD Technical Analysis

AUD/USD  started the week  at 0.8735 and touched the high  of 0.8827. The pair dropped sharply on Friday,  hitting a low of 0.8643  and breaking below support at 0.8660  (discussed last week). AUD/USD closed the week at 0.8663.

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 in  a resistance role.

0.8750 started the week as weak resistance but has some breathing room as the pair trades at lower levels.

0.8660 was breached late in the week but recovered. It is providing support just below the pair and could see action early in the week.

0.8550 has  held  firm since  December 2007.

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  remain bearish  on AUD/USD.

The Australian dollar flirted with 4-year lows last week, and a deepening recovery in the US  bodes well for the greenback.  The markets are bracing for weak job numbers out of Australia this week, which could weigh on the sagging Australia currency.

More:  Are the AUD and NZD currencies on path for more devaluation?

In our latest podcast, we  discuss the big events for October:

Download it directly here.

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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 Australian dollar (Aussie), check out the  AUD to USD forecast.
• USD/CAD (loonie), check out the  Canadian dollar.