Home AUD/USD Forecast Dec. 17-21

AUD/USD  improved close to one cent on the week, as it climbed  into the mid 1.05 range.  The upcoming week has just five events. Here is an outlook of the Australian events, and an updated technical analysis for AUD/USD.

Australian releases were uneventful last week, but the Aussie got a lift from Chinese Flash Manufacturing PMI, which beat the estimate and  remained slightly  above the 50.0 point level for the second month in a row.

Updates: RBA Assistant Governor Guy Debelle spoke at a finance and banking seminar in Sydney. CB Leading Index climbed 0.2%, rebounding after two straight declines.  The RBA released its Monetary Policy Meeting Minutes. The bank noted that while global economic conditions have improved recently,  the Bank’s  easing policy was  appropriate. The RBA has slashed interest rates by 1.25% in 2012. MI Leading Index will be released later on Tuesday. AUD/USD is steady, as the pair was trading at 1.0529.

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

    1. RBA Assistant Governor Guy Debelle Speaks: Monday, 00:00.  Assistant Governor  Debelle will be  part of a panel at  a banking conference in Sydney. If his remarks are more hawkish than expected, this would be bullish for the aussie.
    2. CB Leading Index: Monday, 23:00. This important composite index is based on seven  economic indicators. The index has now posted two straight declines. Will the indicator cross into positive territory in the December reading?
    3. RBA Monetary Policy Meeting Minutes: Tuesday, 00:30. The RBA slashed its benchmark interest rate a earlier in December, to an even 3.0%. This report is based on the most recent policy meeting of the RBA.  Analysts will be combing through  it for hints of future  monetary policy.
    4. MI Leading Index: Tuesday, 23:30. This index is composed of nine leading indicators, but tends to be muted in impact since most of the indicators have already been released. The index has been rising in recent months, and the markets will be hoping that this upward trend continues in December.
    5. RBA Bulletin: Thursday, 00:30.   This release is published on a quarterly basis, and contains an analysis of financial and economic conditions and trends affecting the Australian economy.

* All times are GMT

AUD/USD Technical Analysis

AUD/USD opened at 1.0482, and touched a low of 1.0465. The pair then improved,  climbing as high as 1.0585, as resistance at 1.0605 (discussed last week) held firm. AUD/USD closed the week at 1.0563.

We  begin with resistance at 1.1012. This line has held firm since August 2011. Next is the line at 1.0874. We next encounter resistance at 1.0718, which has not been tested since March. Below, there is resistance at 1.0605. This line held firm as the aussie pushed closed to the 1.06 line before retracting. If the  Australian dollar  makes a move upwards, look for this line to see further activity.

AUD is receiving support at 1.0508. This line was in a resistance role last week, and was breached as the pair pushed higher. Next, there is support at 1.0402. This line has strengthened as the pair trades at higher levels. Below is 1.0326, which  saw a lot of activity in November. This is followed by support at 1.0230. We next encounter support at 1.0174, which has held firm since early October.

This is followed by 1.0080, which is protecting the psychologically important parity level. The parity line, last tested in June, is the next line of support. We next encounter support at 0.9917. The final support line for now is 0.9815,  a strong line which has not been tested  since June.

I am bullish on AUD/USD.

AUD/USD continues to  perform well, as  the  aussie has now  posted gains of around four cents since early October.  Will this impressive run continue? The Federal Reserve announcement of Q4 in the US did not have a major impact on the pair, and the market focus will now concentrate  on the looming fiscal cliff crisis. On the assumption that US lawmakers will hammer out some kind of compromise or at least a stop-gap measure to buy more time, market sentiment would be positive to such a development, and this would likely increase the demand for riskier currencies like the Australian dollar.

The Aussie sometimes moves in tandem with gold. You can trade binary options on gold using this technical analysis.

Further reading:

Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.