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AUD/USD Forecast

AUD/USD Outlook – January 25-29

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The Aussie had a bad week, suffering mostly from the Chinese tightening policy. The upcoming week features 6 events that will impact the Aussie. Here’s an outlook for the upcoming week in Australia, and a technical analysis for AUD/USD.

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

aud usd forecast

After 3 consecutive rate hikes, there’s no certainty that a fourth one will follow. A high interest rate was one of the reasons for the Aussie’s ride in 2009. PPI and CPI due this week should clarify the upcoming rate decision. Let’s start the outlook. The technical analysis will follow:

  1. PPI: Published on Monday at 00:30 GMT. Australian producer prices are released quarterly. In the first half of 2009, prices fell. They printed a small rise in Q3 with a rise of 0.1%. A similar rise is predicted this time. The importance of this release comes from its quarterly scope, rather than monthly in most countries.
  2. NAB Quarterly Business Confidence: Publication time is unknown. In addition to the monthly release, National Bank Australia publishes a quarterly number as well. After 6 consecutive quarters of negative numbers, meaning worsening conditions, this survey of 1000 businesses was positive last quarter, scoring 16 points. A similar number is expected now.
  3. MI Leading Index: Published on Tuesday at 23:30 GMT. The Melbourne Institute indicated that inflation is stable, and now it looks at the whole economy. Although most of the components of this index are already out, it still has an impact trading. 5 months of expansion are probably going to be followed by a sixth one, though last month saw a modest rise of only 0.4%.
  4. CPI: Published on Wednesday at 00:30 GMT. This inflation figure is very important. Apart from being a quarterly figure, it’s released close the rate decision. The last consumer price index for 2009 is expected to show a modest rise of 0.4% in prices. This comes after a rise of 1% in Q3. A bigger rise than 0.4% is needed for being sure that the RBA will raise the rates. AUD/USD will rock around the release. Also note the Trimmed Mean CPI (like the Core CPI) which is predicted to rise by 0.6% after a 0.8% rise last quarter.
  5. CB Leading Index: Published on Thursday at 23:00 GMT. Contrary to the MI indicator earlier in the week, this compound index fell last month by 0.3%, breaking 5 months of expansion. A small rise is expected this time.
  6. Private Sector Credit: Published on Friday at 00:30 GMT. The RBA has shown an almost unchanged number in this indicator since March 2009. This number rises or drops by no more than 0.2%. Last month’s rise of 0.1% is expected to be followed by another rise of the same scale.

AUD/USD Technical Analysis

The Aussie lost more than 200 pips in the last week, and is now close to the important 0.8950 line. I’ve modified many of the lines from last week’s outlook. I’ve added one of the new lines with the help of Mohammed Isah of FXTechstrategy. Thanks!

So, 0.8950 supports the Aussie. This was an important pivotal line in the past. Below this line, 0.8735 was the bottom in December and is another support line. Even lower, 0.8567 held the Aussie after the breakout of 0.8477 and before making the next move.

Looking up, 0.9170 was tested twice from above in recent weeks, before being broken this week. It now serves as the first resistance line. Above this, 0.9327 worked successfully as a resistance line in the past – 4 times. It’s a major resistance line. In the one time it did break, AUD/USD reached 0.94, the 2009 high, which is another resistance line.

I am neutral on AUD/USD

The tightening measures from China are a blow to the Aussie. The strong economy, including a healthy job market, is dependent on the Chinese giant. A slower China means a slower Australia. A big rise in inflation needs to be seen this week for getting the bulls back.

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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.