Australian Dollar Outlook – October 26-30 2009

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Looking for the latest outlook, for the current week? Check out the section: AUD/USD Forecast

AUD/USD finished the week a little bit higher, and tested new ground. This week’s inflation figures and 5 other indicators will shape the direction of the Aussie. Here’s an outlook for the events that will move the Aussie, and an updated technical analysis for AUD/USD

AUD/USD forex chart, with support and resistance lines marked on it. Click to enlarge:

AUD/USD Forecast

The hawkish words from the meeting minutes helped the Aussie. This was the meeting that decided to raise the rates. Which country will follow Australia? while the weaker than expected Chinese growth hurt the Aussie. Will this week’s inflation figures support another rate hike? Let’s see what’s up this week:

  1. NAB Quarterly Business Confidence: Publication time is still unknown – it was delayed for two weeks. Contrary to other Australian figures, this one has been negative in the past 6 months, with -4 last time. Expectations for improving conditions are expected this time – a positive number.
  2. PPI: Producer Price Index has been soft in the past two quarters- negative and falling below expectations. Despite these figures, the RBA raised the rates. This quarter, PPI is expected to rise by 0.3%. A higher number would push for more rate hikes. Published on Monday at 00:30 GMT.
  3. CPI: Completing Monday’s PPI, Consumer Price Index will be released on Wednesday, at 00:30 GMT. Here, prices have rise in the past two quarters, with 0.5% last time. Prices are expected to accelerate, and rise by 0.9% this quarter. This is the most important publication of this week. The Aussie will shake during this release. Together with the CPI, the accompanying figure, Trimmed Mean CPI (Core CPI in other countries) is expected to rise by 0.8%, exactly like the previous quarter.
  4. Malcolm Edey speaks: RBA Assistant Governor Edey is going to talk about current affairs on Wednesday at 1:00 GMT. In previous public appearances, Edey has been very cautious on recovery. Now, after the rate hike, will he express more optimism? Strong words will move the markets.
  5. CB Leading Index: This is a composite index made of 7 economic indicators. Although  it’s a late index that is made out of data that has already been released, it sometimes surprises. In the past two months, it has risen nicely (0.7% last time), but previous data has been revised downwards. Published on Wednesday at 23:00 GMT.
  6. HIA New Home Sales:  The Housing Industry Association publishes this monthly number of new home sales on sometime during Thursday. After two months of stability, this index rose by 11.4% last month, indicating an acceleration also in the housing industry.
  7. Private Sector Credit: This is one of Australia’s most stable indicators. Its moves are very small. In the past three months, borrowing has risen very modestly. Expectations for the current release are modest as well – a rise of 0.2%. Will private borrowing jump as well? Published on Friday at 00:30 GMT.

AUD/USD Technical Analysis

The Aussie began the week with renewed strength, regaining the losses and even passing the 0.9290 resistance line. It went as high as 0.9327, but closed much lower, at 0.9222.

I’m leaving the 0.9290 minor resistance line from last week’s AUD/USD outlook. Above that, 0.9346 served as a minor resistance line in the summer of 2008, and also stopped the Aussie’s ride this week.

A major resistance line appears at 0.95, a round number that has been tested in the past.

Looking down, 0.9090 is a rather strong support line, serving as a support and resistance line recently. Below that, 0.8950 was a line that the Aussie bounced on before climbing to the current levels.

My bullish sentiment continues for the Aussie. This week’s inflation numbers should help the Aussie rise towards parity.

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    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.

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