AUD/USD Outlook – September 7-11 2009

4

AUD/USD traded in a perfect range, and in the late hours of Friday afternoon, it made a breakout and closed above 0.85. This week’s employment figures, as well as 7 other indicators, will shape the direction. Here’s a review for this week’s Australian events and a technical analysis for AUD/USD.

AUD/USD forex chart, with support and resistance lines marked. The Aussie breakout is small but apparent.

AUD/USD Breakout

The Australian economy didn’t plunge into recession, and even growth was strong in the second quarter: 0.6% – double the expectations. Also other Australian figures did well last week, and the interest rate remained the highest in the West – 3%. Let’s check out this week’s 9 indicators:

  1. AIG Construction Index: This survey focuses on construction companies, and reflects on the whole economy. The Australian Industry Group publishes this indicator very early in the week, at 23:30 GMT.  Though this isn’t the most important Australian release, the outcome and the response to it may tell us how real the breakout is.
  2. ANZ Job Advertisements: Also published early, on Monday at 1:30 GMT, this is already a more important indicator, especially since it’s published before the official employment figures. The number of job advertisements in the media reflects the job market quite well. This figure has dropped for over a year and a half. Last month it fell by 1.7%. Will it rise again?
  3. NAB Business Confidence: The National Australia Bank polls about 350 businesses to get their feel of the economy. This figure already overcame the crisis according to the last two releases that were positive. Last month’s result was 10 points, and it should rise again. Published on Tuesday at 1:30 GMT.
  4. Westpac Consumer Sentiment: Another bank this time, the Westpac Banking Corporation, publishes a survey of consumers. 1200 consumers are asked about the economy. In the past three months, consumer sentiment has improved nicely, last time by 3.7%. Also this indicator should be on the rise. Published on Wednesday at 1:00 GMT.
  5. Home Loans: Since most people need a mortgage for buying a new house, the Home Loans figure is a good reflection of the economy. What makes this specific release important is the negative sentiment: it’s expected to drop by 1%, for the first time in 10 months. It’s published on Wednesday at 1:30 GMT, together with the Retail Sales that may overshadow it.
  6. Retail Sales: Australian Retail Sales are have fallen unexpectedly last month by 1.4%. This worrying fall is in contrast to other strong Australian figures. This month, return to growth is predicted – 0.6%. The release, together with Home Loans, make this quite a choppy hour for AUD/USD.
  7. MI Inflation Expectations: The Melbourne Institute showed that inflation is slowly picking up in Australia, despite high interest rates. Last month’s 3.5% was the highest since the crisis broke out. A further rise will put pressure for a rate hike, and might send the Aussie up. Published on Thursday at 1:00 GMT.
  8. Employment Change: Australia’s job market surprised with a rise of 32.2K jobs, when a drop was expected. A fall of 14.7K jobs is expected this week, despite the last gain. Published on Thursday at 1:30 GMT, together with the complementary figure – Unemployment Rate.
  9. Unemployment Rate: Australian unemployment rate remained at 5.8%, posting a surprise for the second month in a row. This employment figure is quoted by the media more than the employment change. Economists are predicting a small rise to 5.9%, but a surprise is very possible.

AUD/USD Technical Analysis

In the past week I’ve paid much attention to the Aussie. AUD/USD traded in fixed range, and then made the breakout on Friday. My bullish sentiment in last week’s Aussie outlook proved correct

Although not a big break, this is a return of last breakout’s pattern. So, we can begin looking up: 0.8836 is out there. It was a significant peak twice in the past. For another technical analysis, read the story by Mohammed Isah.

Looking down, the area of 0.85 is still sensitive. The breakout could prove as false if AUD/USD dips below. Under that, 0.8230 remains a strong support line. If a major dollar surge begins, 0.77 will become relevant, but the direction seems different.

Needless to say, I continue to be bullish on the Aussie.

Further reading:

Get the 5 most predictable currency pairs

About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.