Search ForexCrunch

AUD/USD  surged last week, gaining close to 300 points.  The pair closed at 0.7329. This week’s highlights are NAB Business Confidence and Employment Change.  Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

The Australian dollar enjoyed a banner week, taking advantage of the dovish Federal Reserve minutes.  In the US, Services PMI and Trade Balance were weaker than expected. Jobless claims  beat expectations, but this wasn’t  enough to blunt spectacular gains by the Aussie.

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

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

AUD_USD_Forecast.Oct.12-16

 

  1. RBA  Deputy Governor  Philip Lowe  Speaks: Monday, 21:40.  Lowe will speak at a financial conference  in Sydney. A speech which is more hawkish than expected is bullish for the Australian dollar.
  2. NAB Business Conference: Tuesday, 00:30. This is the first key event of the week. The indicator has slipped badly in the past few months, slipping to just 1 point in August. A reading  below zero indicates worsening conditions, while above zero points to improving conditions. Will the indicator bounce back in the  September release?
  3.  Chinese Trade Balance: Tuesday, tentative. The Australian dollar is sensitive to major Chinese releases such as Trade Balance, as the Asian giant is Australia’s number one trading partner. The trade surplus surged to $60.2 billion in August, crushing the estimate of $48.6 billion. The markets are expecting a smaller gain in September, with a forecast of $46.9 billion.
  4. Westpac Consumer Sentiment: Tuesday, 23:30. Analysts keep a close eye on consumer sentiment indicators, since higher levels of consumer confidence usually translate into increased consumer spending, which  is a key driver of economic growth. The indicator has been struggling, posting 3  declines in the past 4 readings. Will the indicator bounce back in the October report  with a gain?
  5. Chinese CPI: Wednesday, 1:30. A slowdown in China, the world’s second largest economy, has had negative repercussions on the global economy. Inflation indicators help gauge the level of  activity in the Chinese economy. CPI has been rising, and hit 2% in August, which was within expectations. The  estimate  for September stands at 1.8%.
  6. MI Inflation Expectations: Thursday, 00:00. Analysts track Inflation Expectations, since  it can  be  help  predict  actual inflation levels. The indicator slipped to 3.7% in August, compared to 3.2% a month earlier.
  7. Employment Change: Thursday, 00:30. This is one of the most important economic indicators, and an unexpected reading can have a sharp impact on the movement of AUD/USD. The indicator has posted 4 straight gains, all of which were much stronger than expected. The estimate for the September reading stands at 7.2 thousand. The unemployment rate is expected to remain at 6.2%.
  8. HIA New Home Sales: Wednesday, 00:00. The indicator has been struggling, with two declines in the past three readings. The July reading came in at -1.8%.
  9. RBA Financial Stability Review: Friday, 00:30.  The RBA releases this report twice a year, which looks at economic conditions and risks to the country’s financial system. Analysts will be looking for any clues about possible monetary moves by the RBA.

* All times are GMT.

AUD/USD Technical Analysis

AUD/USD started the week at 0.7045 and  posted gains throughout the week.  The pair climbed to a high of 0.7344,  breaking above resistance at 0.7284  (discussed last week).  The pair  closed at 0.7329.

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

Technical lines from top to bottom:

With AUD/USD posting strong gains last week, we begin at higher levels:

0.7770 was an important cap in June.

0.7664 is next.

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.

The line of 0.7213 was a swing low before the recent crash, and serves as a minor line. 0.7160 capped the pair quite recently and could slow a rise.

The round 0.71 mark was challenged  again last week  and is immediate resistance. It is closely followed by 0.7060 which worked in both directions  of late.

The very round level of 0.70 worked as a cushion in August and is under strong pressure. 0.6930 is where the pair bounced from in September.

The round level of 0.69 is the final support line for now.

I  am neutral  on AUD/USD

The Aussie’s gains last week were largely a result of the disappointing Fed minutes. Will the  effects  of  this event spill into  this week,  or are we due for a downward correction? Strong Australian job numbers could give a further boost to AUD/USD.

In the latest podcast we explain how no news is bad news for the USD and more:

Follow us on Sticher or on iTunes

Further reading: