The Aussie enjoyed talks about future rate hikes to make gains this week, despite Bernanke’s mini-rate hike. The upcoming week contains a few quarterly releases that will move the Australian dollar. Here’s an outlook for the Aussie and an updated technical analysis for AUD/USD.
AUD/USD graph with support and resistance lines marked. Click to enlarge:
Another reason for the Aussie’s rise comes from a land far away from Australia – Greece. Less talk about the debt crisis triggered risk appetite which helped the Aussie, with its healthy economy and high interest rate. OK, let’s begin:
- New Motor Vehicle Sales: Published on Monday at 00:30 GMT. Australian auto sales reflect the whole economy. In the past 5 months, they have risen nicely. Last month’s 3.3% rise is expected to be followed by a more modest rise this time.
- Ric Battellino talks: Starts his speech on Tuesday at 7:00 GMT. As deputy governor of the RBA, Ric Battellino has influence on the RBA’s moves. Comments about the next rate decision will move the Aussie.
- CB Leading Index: Published on Tuesday at 23:00 GMT. This composite index is somewhat shaky – it isn’t consistent, and revisions are normal. In the past two months, this index disappointed by dropping at a rate of 0.3% each time. A small rise is expected this time.
- Wage Price Index: Published on Wednesday at 00:30 GMT. While consumer prices are rather stable, the improvement in employment will probably be seen in salaries as seen in previous months. During 2009, wages grew by less than 1%. This release for Q4 of 2009 is predicted to show a rise of over 1%, justifying an upcoming rate hike.
- Construction Work Done: Published on Wednesday at 00:30 GMT and overshadowed by the previous release. This is an important gauge of the whole economy, as construction is a major sector that has a long term effect. After posting neat rises of 2.2% and 4.5% in previous quarters, another strong rise is expected. This will impact the GDP expectations.
- Private Capital Expenditure: Published on Thursday at 00:30 GMT. This is also a quarterly release and it’s probably the most important one this week. Private businesses dropped their investments in Q3 by 3.9%. This negative figure stands out against all of Australia’s positive figures. Also here, a nice rise in Q4’s expenditure will mean that GDP probably rose nicely in that period. Note that expenditure changes are stronger than the changes in GDP.
- Private Sector Credit: Published on Friday at 00:30 GMT. This monthly report complements the previous private sector indicator, but this one tends to show small changes. More credit means more spending and is good for the economy. Last month’s rise of 0.3% was a pleasant surprise after many months around zero. A smaller rise is predicted this time.
AUD/USD Technical Analysis
AUD/USD gained ground and traded between 0.8880 to 0.9040 during this week. I’ve slightly modified the lines from last week’s outlook.
Looking down, 0.8880 provides immediate support, being the bottom line in the past week. Further below, 0.8735 was the bottom in December and is now a support line.
The strongest support comes at 0.8567, a line which provided support in October and also at the beginning of this month.
Looking up, 0.9090 is a minor resistance line that worked in both directions in the past. Further above, 0.9170 is another resistance line.
A major resistance line is at 0.9328, a line which the Aussie failed to break many times in recent months.
I am bullish on AUD/USD.
It looks like the fundamentals are kicking in – in favor of the Aussie. The high interest rate and a great job market seem to win over Bernanke’s moves.
Further reading:
- For a broad view of all the week’s major event in all currencies, read the forex weekly outlook.
- For the Euro, read the EUR USD Forecast.
- For GBP/USD, look into the British Pound forecast.
- For USD/CAD, check out the Canadian dollar forecast.
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