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AUD/USD Forecast, Minors

AUD/USD Forecast January 14-18

AUD/USD showed some upward movement during  the week, but gave up most of those gains, and closed up  maginally higher, at 1.0533. There are seven releases in the upcoming week,  highlighted by  Australian employment numbers.

The Australian dollar jumped following the   release of China’s Trade Surplus, which was much higher than anticipated. However, these numbers were offset by weak numbers for Australian Building Approvals and Retail Sales, which were  well below the estimate. As well, US employment numbers disappointed, raising questions about the US recovery and leading to a flight of capital to the safe-haven US dollar away from riskier assets like the aussie.

Updates: MI Inflation Gauge, a monthly inflation index, jumped to 0.4%. The index posted a decline of 0.1% in the previous release. ANZ Job Advertisements were down sharply in December, falling by 3.8%. The weak figures have raised concerns about the employment situation. Home Loans also disappointed, declining by 0.5%. The markets had anticipated at 0.5% gain. Consumer Sentiment will be released later on Tuesday. Westpac Consumer Sentiment bounced back nicely, gaining 0.6%. New Motor Vehicles  Sales hit a three-month high, jumping by 2.2%. The Aussie dropped on Thursday after weak Australian employment data. Employment Change slumped to -5.5 thousand, well below the estimate of 2.3K. The Unemployment Rate rose from 5.2% to 5.4%, as expected. AUD/USD  broke through the 1.5 line, but then crossed back above. The pair was trading at 1.0538.  

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

  1. MI Inflation Gauge: Sunday, 23:30. This indicator helps analysts track consumer inflation on a monthly basis, as official CPI figures are only released each quarter. The index has not showed much movement of late, and declined by 0.1% in December. The markets are not expecting much change in the January release.
  2. ANZ Job Advertisements: Sunday, 00:30. This important employment indicator measures the change in the number of jobs advertised in daily newspapers and websites in the major cities. The indicator has not posted a gain since April, indicating ongoing weakness in employment. Another decline is expected in this week’s release.
  3. Westpac Consumer Sentiment: Tuesday, 23:30. This consumer indicator has shown some volatility of late, and dropped sharply in December, posting a decline of -4.1%. The markets are hoping that the indicator can bounce back into positive territory in the January reading.
  4. New Motor  Vehicle  Sales: Wednesday, 00:30. This indicator is an important measure of consumer spending and confidence, as as increase in new car purchases indicates that consumers  feel comfortable  purchasing big-ticket items. The indicator  improved to  0.0% last month, and the markets will be hoping that the upward trend continues into positive territory.
  5. MI Inflation Expectations: Thursday, 00:00. This inflation indicator is useful for tracking real inflation, as consumer expectations often translates into actual inflation numbers.  Currently, we are seeing a  downward trend, with the indicator posting a rise of 1.8% last month. This marks the first time the indicator has fallen below the 2.0% level in over five years.
  6. Employment Change: Thursday, 00:30. Employment numbers are among the most anticipated economic releases, and the readings can have a major effect on the movement of AUD/USD. The indicator has posted excellent numbers for three straight months , crushing the estimate  each time. The market forecast  for  January stands at 2.3 thousand. Will the indicator again beat this modest estimate? The Unemployment  Rate  is expected to rise from 5.2%  to 5.4%, and this rise could affect have a negative impact on the aussie.
  7. Chinese GDP: Friday, 2:00. Chinese GDP is a key release, as China is Australia’s number one trading partner. The indicator dropped in December to 7.4%, which matched the market forecast. The markets are expecting a  rebound in January, with an estimate of 7.8%.

AUD/USD Technical Analysis

AUD/USD opened at 1.0595, and then dropped to 1.0467. The pair then jumped higher, touching a high of 1.0598. The pair coughed up most of these gains, closing for the week at 1.0533, as resistance at 1.0508 (discussed last week) remains intact.

We begin with resistance at  1.1066, which was last tested in  August 2011.  This  is followed by  1.0990. Next is 1.0850, which has held firm since February. This is followed by resistance at 1.0739. This strong line has not been tested since early March. Below, there is resistance at 1.0605. This line held firm this week as the aussie pushed very close to the 1.06 line.

AUD/USD is receiving support at 1.0508. This line was briefly  breached as the pair lost ground early in the week. Next, there is support at 1.0418.  This is followed  by 1.0326, which has held firm since mid-November. Below, there is support at 1.0230. We next encounter support at 1.0174, which was last tested in early October.

This is followed by 1.0080, which is protecting the parity level. The parity line, last tested in June, is psychologically significant and the next line of support. The final support level for now is at 0.9917.

I am bullish on AUD/USD.

The Australian dollar has looked sharp since late-December, having gained  close to two cents  in that short time. The aussie has gained momentum since the fiscal cliff agreeement in early January. The US dollar has  been marked by broad weakness, and the aussie could take advantage and post further gains.

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

Further reading:

Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.