Fears of a rate hike in China continue to weigh on the Aussie. In addition, we have 6 events that will shake the Australian dollar in the upcoming week. Here’s an outlook for these events and an updated technical analysis for AUD/USD.
The Australian jobs report was excellent – a gain of over 56,000 jobs, far better than expected. While this gave a boost to the Aussie dollar, the fears in Europe and China hurt the currency. How will it play out this week? Let’s start:
AUD/USD chart with support and resistance lines on it. Click to enlarge:
- Glenn Stevens talks: Sunday, 21:45. The head of the RBA surprised with a rather optimistic statement with the rate decision. This came after dovish words in parliament. Yet again, he appears before a committee in Sydney and will have the chance to rock the Aussie just as trading begins.
- NAB Business Confidence: Tuesday, 00:30. National Bank Australia polls 350 businesses for this survey. The numbers have dropped in the past two months, after jumping beforehand. They remain positive. The figure is likely to be similar to last month’s 8 points.
- Westpac Consumer Sentiment: Tuesday, 23:30. This bank measures changes in consumers’ moods. This volatile indicator dropped sharply last month by 5.3% after a leap of 3.3% in the previous month. A rise is predicted now.
- New Motor Vehicle Sales: Wednesday, 00:30. Sales of vehicles provide a good gauge for measuring activity in Australia. Last month saw a small drop of 0.6%. A small rise is expected now.
- Guy Debelle talks: Wednesday, 00:00. Dr. Debelle will speak in a conference in Sydney and will likely comment on the state of the Australian economy, the monetary policy and maybe even about the housing bubble.
- MI Inflation Expectations: Thursday, 00:30. The Melbourne Institute showed that expectations for price rises have returned to normal, 3.1%, after a leap to 3.8% beforehand. Only a rise above 4% will trigger thoughts of a rate hike sooner than later.
AUD/USD Technical Analysis
Another attempt on parity failed at the beginning of the week, and AUD/US turned to range trading, closing just under the 0.9863 (seen last week as well).
Looking down, 0.9724 worked as support several times in recent weeks and is a strong line now. 0.9660 is now only a minor support, but it’s still there.
Below, 0.9540 proved to be a very strong line, being a swing low a few months ago, and also two weeks ago. 0.9465 provided support for the pair when it struggled on the way up, and is already stronger support.
The next lines are close – 0.9366 was a peak back in April, and 0.9327 capped the pair lots of times beforehand. 0.9220 was a peak earlier in the year and is the last support line for now.
Looking up, 0.9863 is only minor resistance. A stronger line is 0.9915, which capped the pair on the way to parity – which is the next strong and round resistance line.
Above, 1.0085 was the bottom border of a high range the Aussie enjoyed at the beginning of November, and the upper border is 1.0180. Beyond these levels, it’s uncharted territory, with 1.03 being the next line.
I turn neutral on AUD/USD.
The high inflation reported in China casts a dark shadow on the Australian dollar, as a rate hike in China seems closer. On the other hand, the Australian economy still enjoys an excellent job market and other good fundamentals, so choppy trading is likely.
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/Dollar forecast.
- For the Japanese yen, read the USD/JPY forecast.
- For GBP/USD (cable), look into the British Pound forecast.
- For the New Zealand dollar (kiwi), read the NZD forecast.
- For USD/CAD (loonie), check out the Canadian dollar.
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