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AUD/USD Forecast

Australian Dollar Outlook – November 9-13 2009

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After another rate hike, the Aussie finishes the week higher, looking forward to a week of many indicators, including the all-important  employment figures. Here’s an outlook for 9 important events for the Aussie, and an updated technical analysis for AUD/USD.

AUD/USD chart with support and resistance lines marked:

AUD/USD chart

Australia’s interest rate is very high, and is going higher, but this was already anticipated by the markets, which initially sent AUD/USD lower. The strength of the Aussie was seen at the end of the week, when it continued rising despite the scary employment figures from the US. Now, it’s Australia’s turn to publish employment figures, that will impact it directly. And there are more events…Let’s see them:

  1. Home Loans: The number of loans for homes is directly linked to the housing sector, where most home buyers take a mortgage. The housing sector impacts the whole economy. In the past two months, home loans fell in Australia and lagged behind other economic indicators. This time, a return to growth is expected, with a rise to 3.1%. Published on Monday at 00:30 GMT.
  2. ANZ Job Advertisements: At the same time as the Home Loans release, another important indicator is published. The number of jobs that are advertised in Australian newspapers is an indicator of employment. After many months of downfall, the past two months have seen nice growth, above 4%. Growth is expected this time as well. This early release comes well before the official employment figures on Thursday.
  3. Philip Lowe talks: RBA Assistant Governor Phillip Lowe is an influential member of Glenn Stevens’ RBA. In a recent speech about Asia’s role in the Australian economy, Lowe said that his country is well placed to benefit from Asia. Will he be hawkish this time as well? Answers on Monday at 3:30 GMT.
  4. NAB Business Confidence: The National Australia Bank releases this indicator on Tuesday at 00:30 GMT. Their survey of about 350 businesses has been positive in the past 4 months, rising up o 18 before dropping to 14 points this month. It’s expected to resume growing this time.
  5. Chinese Industrial Production: A lot of indicators are released from China on Wednesday, with industrial production being the most important one, published at 2:00 GMT. After growing by 13.9% (annualized), expectations are very high this time, with a jump to 15.3%. Australia depends on trade with China, and this publication will instantly move the Aussie.
  6. Westpac Consumer Sentiment: This survey comes from another major bank, the Westpac Banking Corporation, and it survey 1200 consumers.  Australian consumers have shown confidence in their economy during most of the year, with rising numbers. Last month’s relatively mild rise of 1.6% is expected to be followed by a similar rise this time. Published on Tuesday at 23:30 GMT.
  7. MI Inflation Expectations: The Melbourne Institute hasn’t changed their inflation expectations in the past three months – an annual price rise of 3.5%. Higher inflation expectations are needed for the RBA to move faster on the interest rate. Published on Thursday at midnight GMT.
  8. Employment Change: The net change of jobs in Australia has been a see-saw in the last months, switching from positive to negative. Last month saw a huge positive surprise with a rise of 40.6K jobs, beating expectations of a drop. This doesn’t convince economists, which are pessimistic again, and expect a fall of 10K. A surprise sure is possible. Published on Thursday at 00:30 GMT.
  9. Unemployment Rate: The twin figure of the employment change, published at the same time is the unemployment rate. This figure also surprised economists in the past months. This included a drop from 5.8% to 5.7% last month – the second drop this year. Expectations are for a return to 5.8% this time. A better result will boost the Aussie.

AUD/USD Technical Analysis

The Australian dollar began the week with a break of the 0.8950 support line, a break which proved false. It later made a nice rise and rose steadily rose up to 0.9188.

As in last week’s AUD/USD outlook, I continue to mark the 0.8950 as the initial and important support line. The Aussie bounced off this line a few weeks ago on the way up. Below that, 0.85 was the previous resistance line, and now serves as a support line.

Looking up, I’ve added 0.9280 as the first resistance line. It served as a support line the during last year. A little higher, this YTD high of 0.9327 is the next resistance line.

A stronger resistance line is at 0.95 – this was a major resistance line in 2008, and is also a round number. A collapse of the dollar will stop there.

My trend remains the same: I’m bullish on the Aussie. The Australian economy continues to enjoy Asia’a growth and also a very high interest rate.

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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.