AUD/USD Outlook – September 27 October 1

A big variety of indicators expects Aussie traders in the upcoming week, with building approvals being the highlight. Here’s an outlook for the Australian events, and an updated technical analysis for AUD/USD.

AUD/USD  daily graph with support and resistance lines marked. Click to enlarge:

Australia enjoyed the US dollar’s weakness and rose to fresh highs, with parity in sight. Will this trend continue? Let’s start:

1. HIA New Home Sales: Tuesday. The Housing Industry Association hast shown three straight months of sharp falls in home sales, partly the result of home sales. The biggest drop was last month – 7%. This fall will probably be followed by a rise this time.
2. CB Leading Index: Wednesday, 00:00. This composite index is based on 7 economic indicators, most of them already released. Nevertheless, the publication tends to to have an impact on the Aussie. Last month saw a very modest rise of 0.1% in the index. A similar rise is expected now.
3. Building Approvals: Thursday, 1:30. After three months of drops, this major figure finally rose last month, by 2.3%. This time, it’s expected to remain unchanged. Building approvals are usually slightly overshadowed by retail sales. This time, the separate release makes it more important.
4. Private Sector Credit: Thursday, 1:30. Higher credit drives means more economic activity. Credit hardly grew last month – only 0.1%. The RBA will probably show a stronger rise this time – 0.3%.
5. RBA Financial Stability Review: Thursday, 1:30. At the same time, the RBA will release a thorough report about the financial stability. Unless there are any surprises, Australia financial stability will remain solid.
6. AIG Manufacturing Index: Thursday, 23:30. The Australian Industry Group publishes a PMI-like index, filling the gap for the government. After a few months of high scores, the index fell to 51.7 points last month, close to the critical 50 point mark, but still in the positive zone, meaning economic expansion. A rise is predicted this time.
7. MI Inflation Gauge: Friday.  The Melbourne Institute publishes a month over month inflation indicator. The government releases CPI only once per quarter, so this release fills the gap. Inflation has been rather tame recently, according to MI, rising between 0.1% to 0.3% on a monthly basis.
8. Chinese Manufacturing PMI: Friday, 1:00. Australia’s biggest trade partner has slowed down in recent months, with PMI sliding from the area of 55 to 51.7 this time. A rise to 52.9 is expected this time. This survey of 700 purchasing managers always rocks the Aussie.
9. Commodity Prices: Friday, 6:30. Australia’s commodity-oriented economy depends on the price of commodities. This year-over-year figure has shown a 52.7% rise. A smaller one is expected now.

The Aussie struggled with the 0.9465 line at the beginning of the week (appeared in last week’s outlook) before making the break. Since then, it traded between 0.9465 to 0.96, closing at 0.9590.

Below 0.9465, the next significant line of support is 0.9366, which was a stubborn peak in April. Below, the veteran 0.9327 line that is of significance for almost a year, is the next line of support.

Lower, 0.9220 capped the pair in August and now serves as the next support line. It’s followed by 0.9080, which worked as resistance in July.

Looking up, 0.96, the past week’s high, provides immediate resistance. It’s followed by 0.9670, a line that capped the Aussie during May and June 2008.

Even higher, 0.98 provided resistance after the Aussie fell from the peak in July 2008. The last line is the all-time high of 0.9849.

I remain bullish on AUD/USD.

The Aussie enjoys the greenback’s strength, and also has reasons of its own to rise. The Australian economy is doing well, as seen in the recent employment figures. There’s still room for more gains.

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/USD forecast.
• For USD/CAD (loonie), check out the  Canadian dollar forecast.

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