Search ForexCrunch

For the second week in a  row, the  Australian dollar was almost unchanged over the week, as AUD/USD closed at 1.0223. The upcoming week has  six releases. Here is an outlook for the Australian events, and an updated technical analysis for AUD/USD.

AUD/USD  did show some upward movement, but very weak employment numbers prevented the aussie from making any gains against the greenback.

Updates: Monetary Policy Meeting Minutes will be released by the RBA on Tuesday. A report which is more hawkish than expected is bullish for the aussie. AUD/USD is quiet, as the pair was slightly above the 1.02 line, trading at 1.0211. Minutes from the RBA’s most recent policy meeting indicated that recent interest rate cuts and  indications of  economic growth  were key factors in the central bank’s decision to maintain interest rates in July. The rate is currently 3.5%. New Motor Vehicle Sales disappointed, dropping 0.6%. The aussie continues to improve, and briefly crossed above the  1.03 line. AUD/USD was trading at 1.0286. MI Leading Index climbed 0.8%. It was the largest gain since October 2011. The Australian dollar edged upwards, crossing the 1.03 line. AUD/USD was trading at 1.0312. NAB Quarterly Business Confidence disappointed the markets, dropping to -2 points. This represents a three-month low, and indicates weak business sentiment about the Australian economy. The aussie continued to push upwards, crossing the 1.04 line. AUD/USD was trading at 1.0433. The pair has now reached its highest levels since late April.

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

  1. Monetary Policy Meeting Minutes: Tuesday, 1:30. Analysts scrutinize this report from the central bank for clues about future monetary policy, especially interest rates. A report which is more hawkish than expected is bullish for the Aussie.
  2. New Motor Vehicle Sales: Tuesday, 1:30. This  indicator is  a useful measure of consumer  confidence, although the indicator tends to be volatile.  The indicator had a strong showing in June, jumping 2.4%.
  3. MI Leading Index: Wednesday, 12:30. This important index is comprised of nine economic indicators. The index has enjoyed a recent upswing, climbing 0.5% in the previous reading.
  4. NAB Quarterly Business Confidence: Thursday, 1:30. Business  confidence is critical for economic growth,  making this quarterly release important. The index dropped to -1 point  in the previous reading, indicating weak business confidence in the Australian economy. Will the index improve and cross into positive territory this month?  
  5. RBA Assistant Governor Christopher Kent Speaks: Thursday, 23:15. The markets will be listening for any clues about monetary and economic policy and possible monetary action by the RBA.
  6. Import Prices: Friday, 1:30. This index declined 1.2% in Q1. The markets are expecting a reversal  for Q2, with an estimate of  a 1.6% gain.  

* All times are GMT

AUD/USD Technical Analysis

AUD/USD opened at 1.0195. The pair reached a high of 1.0281. AUD/USD then  dropped to 1.0122, as the resistance line of 1.0080 (discussed last week) held firm.  The pair closed the week at 1.0223.

We  begin with resistance just above the round figure of 1.06, at 1.0605. This is followed by resistance at 1.0557, which has held firm since May 2011. Next, the line of 1.0482 is providing resistance. This line has held firm since March. Below, there is resistance just above the 1.04 line, at 1.0402. This line saw a lot of movement before the aussie’s sharp slide in May. Close by, 1.0340 is the next line of resistance. Below, 1.0230 was again briefly breached this week, but is still providing the pair with weak resistance. This line could face further testing if the aussie strengthens.

AUD/USD is receiving support at 1.0174. Below, there is support at 1.0080. This line  held firm as the  pair showed some strength during the week.  Next, is the psychologically important parity level, which saw action in June. The next support level is 0.9917, which has strengthened as the pair contrinues to trade above the 1.02 line. Next, there is support at 0.9860. This is followed by 0.9780, which has held firm since last November.

The next support line is 0.9668. This is followed by support at 0.9580. Since dropping to this level in the first week of June, AUD/USD has rebounded in impressive fashion. The final support line for now is just above the 0.94 level, at 0.9405.

I am neutral on AUD/USD.

The recent rally by the aussie appears to have run out of steam, as the pair has been unable to break out in July. Australia continues to suffer from the global slowdown, and weaker data out of China is bad news for  Australia, since China is the country’s  largest  trading partner.  Recent employment data was a big  disappointment, and  further weak releases could hurt confidence in the Australian economy and  weaken the Australian dollar.  

The Aussie sometimes moves in tandem with gold. You can trade binary options on gold using this technical analysis.

Further reading: