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AUD/USD Forecast

Australian Dollar Outlook – October 19-23 2009

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The Aussie had an  excellent week, reaching new highs without stopping. This week’s RBA meeting minutes, Chinese GDP and 5 other releases will set 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. Click to enlarge:

AUD/USD Forecast October 2009

RBA Governor Glenn Stevens made hawkish comments regarding future rate hikes. This sure helped push the Aussie higher, together with dollar weakness, especially during the last Asian session. This week, the Aussie will also move by the Chinese bells. Let’s see awaiting us:

  1. Philip Lowe talks: RBA Assistant Governor Philip Lowe will be speaking about the role of China for the Australian economy, before some major Chinese releases are made later in the week. A positive outlook for Asia will help the Aussie. He’ll speak on Monday at 2:00 GMT.
  2. NAB Quarterly Business Confidence: Publication time is still unknown – it was delayed from last week.  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.
  3. Monetary Policy Meeting Minutes: The RBA was the first central bank in the West to raise interest rates after the crisis. We get to see what bankers were discussing during the rate hike decision, and especially see how hawkish they are about the future. Glenn Stevens already hinted that more rate hikes are due. More hints on Tuesday at 00:30 GMT.
  4. MI Leading Index: The Melbourne Institute published this highly regarded compound index on Wednesday at at midnight. After rising by 1.1% last month, the positive trend is expected to continue – this is based on data that has already been released.
  5. Chinese GDP: I’m referring to Chinese economic indicators for the first time here, since they have a growing impact on the Australian economy. One of the primary reasons that Australia didn’t enter recession is thank to the Chinese growth. After cooling down during the recession, China’s growth has accelerated back to an annual rate of 7.9% in the second quarter. In Q3, the Chinese economy economy probably grew by 9%, according to early estimations. A strong growth rate in China will push AUD/USD higher. Published on Thursday at 2:00 GMT.
  6. Chinese Industrial Production: The second most important Chinese release is due at the same time, Thursday at 2:00 GMT. Also here, production has accelerated up to 12.3% last month, and is expected to rise by 13.3% (annually adjusted) this month. Other Chinese releases are CPI and PPI and Chinese retail sales, but they are of smaller impact to the Aussie.
  7. Import Prices: This quarterly indicator has fallen in the past two quarters, and is expected to fall also this time, by 2.6%. A rise in import prices will put pressure for another rate hike. Published on Friday at 00:30 GMT.

AUD/USD Technical Analysis

AUD/USD made nice steps upwards last week, rising above the minor resistance line of 0.9090 and continuing higher. Riding on the fall of the dollar in the last Asian session, AUD/USD reached a peak of 0.9270 before falling and closing the week at 0.9164.

In last week’s Aussie Outlook, I’ve mentioned 0.9090, a line that was broken and held. This is the first support for the Aussie. Further down, 0.8950 serves as a another support line that was a resistance line the Aussie bounced from before climbing higher.

Looking up, the strong resistance line of 0.9290 was tested, somewhat from afar. This is the first and important resistance line. Further up,  0.95 is a round number, and also served as a resistance line in the past. If the Aussie continues that far, it will stop there.

There’s no change in my bullish sentiment towards the Aussie. Strong figures, and a hawkish policy by the RBA support the currency.

Further reading:

Yohay Elam

Yohay Elam

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.