In the US, retail sales were mixed but the Fed meeting minutes indicated that a December hike is a strong possibility. In Australia, NAB Business Confidence improved to 6 points, pointing to stronger business confidence in the economy.
AUD/USD was almost unchanged last week, as the pair closed the week just above the 0.76 level. This week’s key highlights are the RBA minutes and Employment Change. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.
AUD/USD graph with support and resistance lines on it. Click to enlarge:
- RBA Governor Philip Lowe Speaks: Monday, 21:10. Lowe will speak at an investment conference in Sydney. A speech that is more hawkish than expected is bullish for the Australian dollar.
- RBA Monetary Policy Meeting Minutes: Tuesday, 00:30. The RBA will release the minutes from the policy meeting earlier in October. The markets will be looking for clues regarding the RBA’s future monetary plans.
- MI Leading Index: Tuesday, 23:30. The index is based on 9 economic indicators and is unlikely to have much impact since much of the data has already been released. The indicator edged down to 0.0% in August.
- Mid-Year Economic and Fiscal Outlook: Wednesday, 00:30. This report compares the government’s fiscal performance in relation to the projections announced in the May budget. If the government has not met its targets, the Aussie could lose ground.
- Chinese GDP: Wednesday, 2:00. Chinese key numbers can have a significant impact on the movement of the Aussie, as the Asian giant is Australia’s number one trading partner. Chinese GDP has been steady, posting two straight readings of 6.7%. No change is expected in the Q3 release.
- Chinese Industrial Production: Wednesday, 2:00. The indicator improved to 6.3% in August, its strongest gain since June 2015. The upward trend is expected to continue in September, with an estimate of 6.4%.
- Australian CB Leading Index: Wednesday, 14:30. This minor indicator improved to 0.4% in July, marking a 3-month high.
- Employment Change: Thursday, 00:30. The indicator slipped in August, posting a decline of 3.9 thousand. This was much worse than the estimate of 15.2 thousand. The markets are expecting a sharp improvement in September, with an estimate of 15.2 thousand. The unemployment rate dipped to 5.6%, just below the estimate of 5.7%. The estimate for September is 5.7%.
- NAB Quarterly Business Confidence: Thursday, 00:30. This important indicator dropped to 2 points in Q2, compared to 4 points in the first quarter.
AUD/USD Technical Analysis
AUD/USD opened the week at 0.7600. Late in the week, the pair dropped to a low of 0.7506 and then reversed directions and climbed to 0.7648, as resistance held at 0.7691 (discussed last week). AUD/USD closed the week at 0.7611.
Live chart of AUD/USD:
Technical lines from top to bottom:
We start with resistance at 0.7938.
0.7835 has been a cap since April.
0.7691 has been the high point in October.
0.7597 was tested in support for a second straight week.
0.7513 is the next support level.
0.7427 marked the low point for the month of September.
0.7334 was a cap in December 2015.
0.7194 is next.
0.7093 is the final support level for now.
I remain bearish on AUD/USD
The US economy continues to improve, buoyed by a red-hot labor market. With a December rate hike priced at 60%, monetary divergence continues to favor the US dollar.
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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.
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