With interest rate rising to 4%, the Aussie continued north. Australia’s employment figures will be watched this week, among other releases. Here’s an outlook for the Australian events and an updated technical analysis for AUD/USD.
AUD/USD graph with support and resistance lines on it. Click to enlarge:
The Aussie hardly felt the American Non-Farm Payrolls. This shows its strength, also seen in the strong Q4 growth. Let’s start the review. The technical analysis will follow:
- ANZ Job Advertisements: Published on Tuesday at 00:30 GMT. The number of job ads in papers is a good indicator for the employment situation. After two sharp rises, this indicator dropped by 8.1% last time. It’s predicted to rise once again. Since it’s released before the official job numbers, it tends to shake the Aussie, but it isn’t always correct.
- NAB Business Confidence: Published on Tuesday at 00:30 GMT and overshadowed by ANZ. National Bank Australia surveys about 350 businesses for this highly regarded survey. Optimism reached a peak in December, at 19 points and then dropped. A score similar to last month’s 15 points is predicted now.
- Westpac Consumer Sentiment: Published on Tuesday at 23:30 GMT. This bank measures the consumers – 1200 of them. This indicator isn’t stable – it fell by 2.6% after rising by 5.6% beforehand. A slower rise is predicted this time.
- Home Loans: Published on Wednesday at 00:30 GMT. The housing sector is very important for the whole economy. Home Loans tends to have a strong impact on the Aussie. Three months of drops, including two drop above 5%, are expected to end now with a rise of 2.1% in loans.
- MI Inflation Expectations: Published on Thursday at midnight GMT. The Melbourne Institute has shown that inflation expectations are tame – they softened from 3.5% to 3.2% last month. The same score is expected this time. As inflation is officially reported only once a quarter, this unofficial number is of importance.
- Employment data: Published on Thursday at 00:30 GMT. Australian employment has beaten expectations for four months in a row. Employment Change rose by 52,700 last month, more than three times the early expectations. Also the unemployment rate didn’t stay behind – it dropped to 5.3%, the lowest in a year. The unemployment rate isn’t expected to change and a gain of 15,300 jobs is expected this time. Will we have a fifth consecutive surprise?
- RBA Bulletin: Published on Friday at 00:30 GMT. This collection of economic data is what the RBA sees when making policy decisions. It’s importance is about to rise as the frequency is about to be changed to once a quarter, from once a month.
AUD/USD Technical Analysis
The Aussie climbed steadily from the 0.8850 support line up to the 0.9090 resistance line, closing higher than last week – at 0.9076.
The lines haven’t changed since last week. Below, 0.8850, 0.8735 provides additional support – it was December’s low. Even lower, 0.8567 was a support line when the Aussie was going up, and was also tested at the beginning of this year.
Looking up, if AUD/USD breaks 0.9090, the next line of resistance is at 0.9170, a line that served as temporary support. The most important line of resistance is at 0.9327, where the Aussie bounced many times in the past.
I am bullish on AUD/USD.
The rate hike and the strong growth showed the strength of the Australian economy once again. The employment data should do it this week, and help it move above 0.9090.
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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