AUD/USD Outlook June 11-15

After a brutal month of May, the Australian dollar roared back, gaining about 260  pips against the US dollar, as the aussie even touched above parity. The pair closed the week just above the 0.99 line,  at 0.9907.  The upcoming week is very quiet, with just three releases. Here is an outlook for the Australian events, and an updated technical analysis for AUD/USD.

The Australian dollar was buoyed by some excellent economic data. GDP jumped 1.3%, its best result in four years. As well, Employment Change was well above the market forecast. The markets shrugged off   some of the weaker releases, such as the rise in unemployment.

Updates: The Australian dollar rose after the announcement of the Spanish bailout. The aussie charged over the parity line,  as AUD/USD climbed as high as  1.009. It then retraced, and was trading at 0.9951. The first release of the trading week will be NAB Business Confidence on Tuesday.  The market estimate stands at -2 points, which would be the indicator’s lowest reading since October. The aussie continues to lose ground, as AUD/USD was trading at 0.9913. RBA Governor Steven’s delivered a speech at the Prime Minister’s Economic Forum in Brisbane. Consumer Sentiment declined sharply in May, dropping to 0.3%. The aussie  continues to edge towards parity. AUD/USD was trading at 0.9979. The MI Inflation  Expectations came in at 2.3%. This was the lowest reading in over five years, and could be a sign of lower inflation. AUD/USD was down slightly, trading at 0.9952.

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

  1. NAB Business Confidence: Tuesday, 1:30. Business Confidence has been steadily rising over the past few months, as the indicator posted a reading of 4 points in May.
  2. Westpac Consumer Sentiment: Wednesday, 00:30. This indicator tends to show some volatility, which makes accurate forecasts a tricky task. After two consecutive readings in negative territory, the May release managed to push  above the zero level, at 0.8%. Will the indicator remain in positive territory in June?
  3. MI Inflation Expectations: Thursday, 1:00. Analysts are interested in inflation expectations, since these readings often correlate with real inflation figures. The May reading  was down slightly, at 3.1%.

* All times are GMT.

AUD/USD Technical Analysis

AUD/USD opened at 0.9642. The pair dropped to a low of 0.9642, and then reversed direction, as it reached a high of 1.0022. AUD/USD closed the week just at 0.9907 as the  resistance line of 0.9917  (discussed last week) held firm.

Technical levels from top to bottom:

We begin higher this week, with strong resistance at 1.0552. Next, there is resistance at 1.0482. This line has held firm since March. Below, there is resistance just above the 1.04 line, at 1.0402. This line was fluid for much of April. Close by, 1.0340 is the next line of resistance. Below, the line of 1.0230 is providing resistance for the pair. Next is the line of 1.0080, which had been protecting the all-important parity level since December 2011. This line was breached in May,  and is now providing resistance.  The next line of resistance is 0.9917, which was breached by the pair this week on its upwards swing, and is currently providing weak resistance.

The pair is receiving support at the line of 0.9860. This is followed by 0.9780, which has reverted to a support line. It had provided resistance last week, following the sharp slide by AUD/USD. The next support line is 0.9668. This line has strengthened as the pair trades at higher levels. Below, there is support at 0.9541. Next, there is strong support just above the 0.94 level, at 0.9405. Our final support line for now is at 0.9294, which has held firm since September 2011.

I  am  neutral on  AUD/USD.

The Australian dollar  certainly had an impressive week, reversing its recent  steep  slide.    Will the upward trend continue? With  the crises in Greece and Spain,  investors will continue to keep a close eye on  safe haven currencies, which could  reduce demand  for the  Australian currency.  As well, weaker demand in China, Australia’s number one trading partner, could  dampen economic growth in Australia. However, if the Australian economy continues to churn out some strong figures, we could see the aussie continue to improve.  

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

Further reading:

Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.