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The  Australian dollar  rose over 100 pips against the greenback, closing just above the 1.03 level. The upcoming week is busy, with  eight indicators being released. Here is an outlook for the Australian events, and an updated technical analysis for AUD/USD.

Updates: The Aussie dipped under 1.03 as the ANZ Job Advertisements dropped by 0.9%, triggering worries about employment. It managed to climb back up as home loans rose by 1.4%. The better than expected Chinese GDP (8.9% annualized) certainly gave a boost to the Aussie that touched 1.0450 before sliding lower. Australian  New Motor Vehicle Sales disappointed with a big drop of 2.9%. This prevented another move upwards. AUD/USD is struggling around 1.04. Australian employment data disappointed with a drop of nearly 30K jobs, although it’s important to note that full time jobs were actually on the rise. AUD/USD managed to rise above 1.04 once again, also on the European optimism.

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

 

  1. MI Inflation  Gauge:  Sunday, 23:30. The  readings for the third quarter were all close to the zero level, indicating practically no inflation.  More of the same is expected for the January reading.
  2. ANZ Job Advertisements:  Monday,00:30. Employment ads are an important indicator of the  need for  new employees, which is a critical component  for  economic growth.  The indicator has risen over the past three readings, reaching the important zero level in December. Will the index venture into positive territory this month?
  3. Home Loans:  Monday,  00:30. This  is one of the most important indicators in the housing sector. The indicator dipped in  December to 0.7%, but this was somewhat better than the  market  forecast of 0.1%. The forecast for January is up slightly to 1.0%.
  4. Westpac Consumer Sentiment:  Tuesday, 11:30. Consumer confidence indicator plunged to -8.3%, its lowest reading since July. It is these types of readings which shake up markets, as economic growth relies on consumer spending. Look for the aussie to slide if this month’s figures repeat these awful numbers.
  5. New Motor Vehicle Sales:  Wednesday 00:30. This is another important indicator of consumer spending and confidence in the economy. The indicator recorded weak figures in the final quarter of 2011, with a December reading of -0.7%.
  6. MI Inflation Expectations:  Thursday 00:30. This indicator looks at the expections among consumers as to inflation of goods  and services. Little change is expected in the reading this month.
  7. Employment Data:  Thursday 00:30. The Employment Change indicator is quite volatile, making accurate market forecasts difficult. The reading plummeted in December to -6.3K, shocking the markets, which had called for a reading of 10.3K. The market is yet again predicting a reading of 10.3K. The Unemployment Rate indicator has been very steady at around 5%, and no change is anticipated for this month.
  8. Import Prices:  Friday 00:30. An increase in imports signals more consumer spending and greater confidence in the economy. The indicator has dropped in  the past two readings, falling to the zero level in December. The  market forecast  for  this month  is a slight increase to 0.6%.

* All the times are GMT.

AUD/USD Technical Analysis

AUD/USD  opened the week at 1.0199,  and started the week by dropping  as low ass 1.0145. It rebounded, however, climbing as  high as 1.0378, close to the resistance line of 1.04 (discussed last week)  before closing at 1.0311.

Technical levels from top to bottom:

We begin with the round number of 1.0733, which  is strong resistance.  This is followed by strong resistance  at 1.0660.  Next is the round number of  1.05, which  served as support in May and  June, and is now in a  resistance role.  Below is 1.0450, which was last tested in November and is a line of strong resistance.    This is followed by the round number of 1.04, which  has held steady in 2011. Next, 1.0336  was breached this week and is now a  weak resistance line. After serving as an important line of    resistance in December, the level of 1.02 now a weak support line and will be tested on a sustained downswing.  Below, 1.0080 is  proving strong support.  role.  Next is 0.9890, a weak support line. This is followed by0.9810, which is providing  strong support to the pair. There is further major support for the aussie at the 0.9660 level. Finally, the round number of 0.95, which was breached  only once in 2011 is providing strong support to the pair.

I am  neutral  on AUD/USD

The US economy continues to gain steam, which should push AUD/USD downwards. However,  the  aussie has managed to hold its own against the greenback in 2012, showing surprising strength. This is unlikely to continue long-term, as economic fundmantals favor the US economy over that of Australia.

Further reading:

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