After a rather quiet week of perfect range trading, the upcoming week is huge. What a week awaits the Australian dollar: GDP, a rate decision and 9 more indicators are released this week. Here’s an outlook for the Aussie events, and an updated technical analysis for AUD/USD.
AUD/USD forex chart with important support and resistance lines marked on it:
Private Capital Expenditure, which was far better than expected, helped the AUD/USD to make gains on Thursday. Also the other three indicators last week were good. This week feature more releases and of higher importance. Let’s dive into them:
- HIA New Home Sales: I’m starting with this indicator, since it still doesn’t have a release time, but it’ll probably be at the beginning of the week. As a housing sector figure, it’s important, despite being released in a month’s delay. Last time this index rose by 0.5%. A rise can be expected this time as well.
- MI Inflation Gauge: The Melbourne Institute publishes this figure very early in the week – on Monday at 00:30 GMT. This is an early version of CPI. The MI Inflation Gauge showed acceleration in prices in the last months. If prices are indeed picking up, this would push the RBA to raise the interest rate.
- Private Sector Credit: Borrowing in Australia has been quite stable in recent months, being around zero. After rising by 0.1% last time, consumer borrowing is expected to grow by 0.2% this time. More borrowing = more spending = inflation pressures.
- AIG Manufacturing Index: The Australian Industry Group surveys about 200 manufacturers and publishes this figure every month. Similar to PMI releases, a figure below 50 means contraction. This release is interesting, since contrary to other Australian indicators, it has remained down under for quite some time. Last time it rose to 44.5. Will it go above 50 this time? We’ll know on Monday at 23:30 GMT.
- Building Approvals: This major housing figure is very shaky. After dropping by 12.5% two months ago, it leaped by 9.3% last month. This time, it’s expected to rise by 3.3%. Despite its wild behavior, this indicator is an excellent gauge for the whole economy, and tends to have strong impact on AUD/USD. Published on Tuesday at 1:30 GMT.
- Current Account: Australia’s deficit is squeezing in recent months, reaching 4.6 billion. This time it’s predicted to expand and rise to 10.3 billion. Unless there’s a big surprise, the impact will be small, since it’s published together with Building Approvals.
- Rate Decision: Australia continues to have the highest interest rate in the West, and will most probably continue to hold this title. The Cash Rate is predicted to remain at 3%. RBA Governor Glenn Stevens, stated in parliament that the interest rate should go back to normal. Will he repeat this statement? We’ll know at the RBA Rate Statement. This major event is due on Tuesday at 4:30 GMT.
- Commodity Prices: Australia’s exports lean on commodities. This release, on Tuesday at 6:30 GMT, is an annually adjusted number, so it’s expected to remain negative, despite the recent rise in oil prices. Last time it showed a fall of 31.8%. It should slightly rise this time.
- GDP: Australia never fell into recession during this crisis – the economy contracted for only one quarter. Growth is expected to continue in the second quarter – a rise of 0.6% is predicted after a 0.4% rise in the first quarter. This all-important release is due on Wednesday at 1:30 GMT. AUD/USD will shake…
- AIG Services Index: This is the complementary release to Monday’s AIG Manufacturing Index. According to AIG, the services sector showed expansion intentions two months ago, which was better than the manufacturing sector. Currently they’re both around 44. We should see a rise also here. Published on Wednesday at 23:30 GMT.
- Trade Balance: Despite having a commodity-export-oriented economy, the global recession sent Australia’s trade balance into a deficit. After a deficit of 440 million last time, the deficit is predicted to expand to 800 million. Published on Thursday at 1:30 GMT.
As you can see, there are no Australian releases on Friday. The scene totally belongs to the American Non-Farm Payrolls, and the anticipation for their release. Other important American data will also move the pair, but this week’s packed Australian calendar leaves little room for them…
AUD/USD Technical Analysis
The Aussie began the week by rising to 0.84. It tumbled on Wednesday and bottomed out at 0.8238 – right above the support line. Contrary to the previous week, 0.8230 held strong. This confirms that the drop in the previous week to 0.8160 was indeed a false summer break.
When the dollar began falling on Thursday, the Aussie leaped back up, and also here it was blocked by the 0.85 resistance line, before closing at 0.8407.
All in all, AUD/USD had perfect range trading, as predicted in last week’s Aussie outlook.
So, beyond 0.85, 0.88 is the next resistance line. It served as such when the crisis began. If the dollar will fall, AUD/USD will aim for this target.
On the bearish scenario, a real break under 0.8230 will open the road to 0.77, the next serious support line, which served as such in recent months, and immediately after the crisis began.
Bullish on AUD/USD
The Australian economy is doing great. As aforementioned, recession hasn’t reached the land down under. If the positive situation is confirmed in this week’s influx of data, the Aussie should go up. I have a strong bullish sentiment.