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AUD/USD Forecast

AUD/USD Outlook – October 4-8

After a week of big gains, Aussie traders expect a busy week, with an interesting rate decision and employment figures being the most important events. Here’s an outlook for the Australian events, and an updated technical analysis for AUD/USD.

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

AUD USD Forecast October 4-8

The Aussie enjoyed the positive mood – risk appetite. But contrary to the Euro, the Aussie has good reasons to rise. Will this continue, or will we see a pause? Let’s start:

  1. MI Inflation Gauge: Sunday, 23:30. This inflation indicator from the Melbourne Institute fills in the gap for the government, that publishes official CPI only once a quarter. A similar rise to last month’s 0.2% is expected now.
  2. AIG Services Index: Monday, 22:30. The Australian Industry Group publishes an index that is similar to PMI releases in other countries. Last month’s figure was worrying – 47.5 points, under the critical 50 point mark. A rise above 50 points is expected now.
  3. Retail Sales: Tuesday, 12:30. Consumers seem quite confident in Australia. Last month saw a nice rise of 0.7% rise in the volume of sales. Also now, a neat 0.5% rise is predicted. This is the most important release in a bunch of 4 simultaneous releases.
  4. ANZ Job Advertisements:  Tuesday, 00:30. The amount of job advertisements in newspapers is considered a good indicator for the official jobs released later in the week. Last month’s 2.6% in this indicator proved to be correct when it came to the official figures. Another small rise is expected in job ads.
  5. Trade Balance: Tuesday, 00:30. Australia enjoys a nice surplus in its trade balance, especially due to exports to China. This surplus is predicted to significantly widen now from 1.89 to 2.31 billion.
  6. NAB Business Confidence: Tuesday, 00:30. National Australia Bank showed that businesses are still confident and optimistic last month, with a score of 11 points. A similar figure is expected now. Unless there’s a big surprise here and no surprises in the other indicators released at the same time, this will have a small impact.
  7. Rate decision: Tuesday, 3:30. This time, there’s no clear consensus on what the RBA will do. On one hand, the economy grew at a great 1.2% rate in Q2, and employment causes envy from other countries. On the other hand, the global uncertainty is high and perhaps Glenn Stevens and his colleagues wouldn’t like to push the currency higher. So, an unchanged rate of 4.50% or a resumption of hikes with a raise to 4.75% will both rock the Aussie, as well as the statement about future moves.
  8. AIG Construction Index: Wednesday, 22:30. Also the construction sector is contracting according to AIG. From 43.2 points, this indicator will probably rise this time, showing that housing is improving following the slowdown they got after the rate hikes.
  9. Employment data: Thursday, 00:30. Last month’s excellent job figures gave a big boost to the Aussie. This time, the unemployment rate is expected to remain unchanged at 5.1% and a smaller gain is expected in jobs – 20,300 after 30,900 last month. Any figure will rock the Aussie.
  10. RBA Annual Report: Thursday morning. This report can provide deeper analysis of the Australian economy and what it faces after the recovery from the global crisis.
  11. Ric Battellino talks: Friday, 2:30. The RBA deputy governor will speak in a conference in Brisbane and will likely expand on future monetary policy, following the rate decision.

All times are GMT.

AUD/USD Technical Analysis

After a struggle with 0.96 (mentioned in last week’s outlook), the Aussie pushed upwards and settled between 0.9660 and 0.9730. Attempts to move even higher didn’t succeed.

At 0.9721, the Aussie is just under the new resistance line of 0.9730 that it reached in the past week. Even higher, 0.98 provided resistance after the Aussie fell from the peak in July 2008. The last line is the all-time high of 0.9849.

The ultimate line of resistance is parity between the Aussie and the greenback. This never happened.

Looking down, 0.9660 was an area of struggle in the past week and provides minor support. It’s followed by 0.96 which capped the pair in the previous week. 0.9465 also temporarily capped the Aussie on the way up, and provides further resistance.

Below 0.9465, the next significant line of support is 0.9366, which was a stubborn peak in April. Below, the veteran 0.9327 line that is of significance for almost a year, is the next line of support.

Lower, 0.9220 capped the pair in August and now serves as the next support line. It’s followed by 0.9080, which worked as resistance in July.

I turn from bullish to neutral on AUD/USD.

The Aussie has all the reasons to rise – a great economy amidst global weakness. But, the greenback could retrace this week. Unless there’s a rate hike in Australia, a pause in the Aussie’s run is more likely.

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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.