A relatively light week expects Aussie traders, after seeing high volatility recently. Here’s an outlook for the Australian events, and an updated technical analysis for AUD/USD, struggling around parity.
AUD/USD chart with support and resistance lines on it. Click to enlarge:
In the past week, the Aussie was hurt by the Chinese hike of the reserve ratio, worries in Europe and also an expected pause in rate hikes in Australia. How will trade now? Let’s start:
- CB Leading Index: Tuesday, 23:00. Australia’s Conference Board showed slower growth last month – 0.2% in comparison with 0.8% beforehand. The composite index is based on 7 indicators, most of them already released. Nevertheless, it moves the Aussie.
- Construction Work Done: Wednesday, 00:30. This is a quarterly indicator, making it very important for the construction sector and for the whole economy. In Q2, the value of construction rose by 3.5%, more than expected, and gave a boost to the Aussie. The result will probably be similar now.
- Private Capital Expenditure: Thursday, 00:30. Also this indicator is released only once per quarter, and serves as a good gauge for businesses’ moods. In the last quarter, a big disappointment was seen, as the indicator fell instead of rising. A rise in Q3 will probably correct the fall last time.
- Glenn Stevens talks: Thursday, 22:30. The head of the RBA will speak before the Standing Committee on Economics in Australia’s parliament. Stevens always releases interesting statements about the economy, and often also provides strong hints about monetary policy. This public appearance comes on top of thin volume, and can shake the Aussie for many hours.
* All times are GMT.
AUD/USD Technical Analysis
After failing to climb above the 0.9915 line, the Aussie fell and found support twice at 0.9725, a new line (didn’t appear last week), before recovering and closing at 0.9861, around the pivotal 0.9863 line.
Yet again, 0.9863 served as a pivotal line and has the next role for this week as well. Above, 0.9915 worked as strong resistance in recent months, and also in the past week.
Higher, parity is the next strong line of resistance, after working as support beforehand. 1.0080 was the bottom line of a high range the Aussie traded in after QE2 was announced. It’s followed by the peak of 1.0180, which was also the top line of that high range.
Looking down, 0.9725 provided a good cushion for the fall of the Aussie, and is now immediate support. Below, 0.9660 is a already a very strong line, as it provided strong support for two weeks in a row.
Lower, 0.9540 was a swing low and is the next minor line of support. Even lower, 0.9465 remains an important line of support, working both as support and as resistance a few weeks ago. The next support lines below are 0.9366, which was a peak back in April, and 0.9327, which worked as fierce resistance several times during the past year. The Aussie jumped above this line on a weekend gap.
I am neutral on the Aussie.
A rate hike in China can put a heavy weight on AUD/USD, and counter Australia’s attractive interest rate, job market and strong economy in general. The hike of China’s reserve ratio on Friday gave us a peek at what could happen when the Chinese raise the interest rate.
Further reading:
- For a broad view of all the week’s major events worldwide, read the USD outlook.
- For EUR/USD, check out the Euro/Dollar forecast.
- For the Japanese yen, read the USD/JPY forecast.
- For GBP/USD (cable), look into the British Pound forecast.
- For the New Zealand dollar (kiwi), read the NZD forecast.
- For USD/CAD (loonie), check out the Canadian dollar.
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