AUD/USD Outlook – February 14-18

After a bad week, the Aussie is expected messages from the central bank as well as important Chinese figures that will rock it. Here’s an outlook for the Australian events, and an updated technical analysis for AUD/USD.

Employment figures in Australia exceeded expectations, as it happens many times. Despite the strength of the economy, the US dollar’s move was rather strong, and AUD/USD bowed before it. Will this trend continue?

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

1. Chinese Trade Balance: Monday, delayed from last week. Australia’s main trade partner saw a big drop in its huge surplus, monitored by all the world. This surplus is expected to drop even further this time, to 10.3 billion.
2. Home Loans: Monday, 00:30. The number of loans in Australia has exceeded expectations in recent months, with an especially strong rise last month – 2.5%, when a drop was predicted. Another rise is due now, of 1.6%. This will help the Aussie.
3. Monetary Policy Meeting Minutes: Tuesday, 00:30. The recent rate statement was quite upbeat – the RBA dismissed the floods and saw a strong Australian economy. We’ll now get the full protocol, and see whether the central bank intends to hike the rates and when. This release always rocks the Aussie.
4. Chinese CPI: Tuesday, 2:00. Inflation in China is an issue for the whole world, and the Chinese central bank is already on the move to tackle it. After dipping from 5.1% to 4.6% last month, the annual pace of price rises will probably accelerate to 5.5% this time. A rise which is too strong may hurt the Aussie.
5. MI Leading Index: Tuesday, 23:30. This composite index is build from 9 indicators, most of them already released. Nevertheless, the publication still has a significant impact on the Aussie. Following an unchanged number last month, the index is likely to post a modest rise now.
6. New Motor Vehicle Sales: Wednesday, 00:30. Sales of cars, trucks and other vehicles in the Australian continent serve as a good gauge for the whole economy. Last month saw a rise of 0.8%, and a similar rise is likely now.
7. Philip Lowe talks: Wednesday, 22:10. RBA Assistant Governor Lowe will speak in Sydney, and is likely to shed more light on the situation of the Australian economy and the prospects of inflation. In past appearances, he moved the Aussie.

* All times are GMT

AUD/USD Technical Analysis

The Aussie began the week with attempts to break above the 1.0180  level (mentioned last week). The failure to break higher sent the pair down, and it even slipped below parity before managing to close above this line, at 1.0017.

Looking down, AUD/USD parity is the immediate and strong line of support. Minor support is found at 0.9915, which was a peak on the way up.

More important is found at 0.98, the lowest level in 2011 so far. It prevented further falls  Lower, 0.9724, that  was a tough line beforehand.

Lower, 0.9660 worked in both directions, and especially as a cushion back in October.  It’s followed by 0.9540 which was the bottom in November and also in September, and serves as important support.

Below, 0.9460 was a stepping stone on the way.  The next two lines are neighbors – 0.9366 and 0.9327 worked as resistance lines many times in the past. The last line on the downside is 0.9220, a peak seen many months ago

Looking up, 1.0080 turns into resistance. It provided temporary support when the pair was trading higher at the beginning of November and also in the past week.

Further above, 1.0180 was the top border of that November range, and also provided tough support now. The last line is the multi-year high of 1.0254, reached at the end of 2010. Beyond, it’s unchartered territory.

I am bullish on AUD/USD.

The strong jobs report and the positive outlook from the RBA should provide the Aussie reasons to rise, despite the strengthening US dollar and US economy.

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.