Home AUD/USD Forecast August 19-23

After a couple of volatile weeks, AUD/USD settled down and posted modest gains last week.  AUD/USD  ended the week slightly below the 0.92 line.  It’s a  quiet week ahead, with  just  six  releases on the schedule. Here is an outlook of the events and an updated technical analysis for AUD/USD.

Australian data was a mix last week. Consumer Sentiment was strong, but Business Confidence dropped sharply. Over in the US, Unemployment Claims were  solid, but  disappointing  manufacturing and weak consumer confidence numbers  hurt the US dollar.

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AUD/USD graph with support and resistance lines on it. Click to enlarge:   AUD USD Aug19-23 Technical Analysis

  1. New Motor Vehicle Sales:  Monday, 1:30.  New Motor Vehicle Sales is an important indicator  of consumer spending, as an increase in sales indicates more consumers are comfortable making big-ticket purchases such as new cars and trucks. The indicator shot up to 4.0% in July, its highest reading since October 2012. The markets will be hoping for another strong release in August.
  2. RBA Monetary Policy Meeting Minutes:  Tuesday, 1:30. This release provides details of the RBA’s most recent policy meeting. With the RBA cutting rates from 2.75% to 2.50% at the August 6th meeting, analysts will be carefully reviewing the minutes for the considerations and factors which led the RBA to reduce rates.
  3. MI Leading Index: Wednesday, 00:30. This index is based on nine leading indicators, but is considered a minor release since most of the indicators have already been released. The index posted a weak gain of just 0.2% in the August reading.
  4. CB Leading Index: Thursday, 00:00. This index, which is composed of six leading indicators, is also treated as a minor release, as much of the information in the index has already been released. The index gained a healthy 1.0% in the July reading, and the markets will be hoping for another solid gain in the upcoming release.
  5. Chinese Flash Manufacturing PMI: Thursday, 1:45. The Australian dollar is sensitive to Chinese key releases, given that China is Australia’s number one trading partner. Flash Manufacturing PMI has not looked strong in recent readings, with the past three releases falling below the 50-point level, which indicates contraction. Another reason for concern is that the PMI has fallen short of the estimate for four consecutive releases. The markets are expecting an improved reading in August, with an estimate of 48.3 points. Will the index post a stronger reading in the August release?
  6. Jackson Hole Symposium: Thursday-Saturday. The Jackson Hole Symposium in Wyoming is an important  economic  conference attended by central bankers, finance ministers, financial market participants and academics  from around the world.  With speculation that the Fed could taper QE as early as September, the conference could  be prove to be a market-mover and will be carefully monitored by analysts.

AUD/USD Technical Analysis

AUD/USD  started the week at 0.9112. The pair dropped to a low of 0.9058, as support at 0.9041 (discussed last week) held firm. The pair then rebounded to a high of 0.9215 and closed the week at 0.9183.

Live chart of AUD/USD:   [do action=”tradingviews” pair=”AUDUSD” interval=”60″/]

Technical lines from top to bottom:      

We  begin with strong resistance at 0.9748, which acted as a cap in early June.

0.9634 saw action in mid-June,  when the pair started a downward slide in which it dropped below the 0.92 line.

0.9549 is the next line of resistance.  This is followed by 0.9428. This line had  played a support  role  since late 2011, but was breached in June and has provided strong resistance since then.

0.9283  saw  a lot of action in  the months of June and  July, alternating between resistance and support roles. It is currently providing resistance, protecting the 0.93 line.

0.9180 was breached this week but remained in a support role at the end of the week as AUD/USD recovered.

0.9041  was providing weak support in the first half of July and held firm as the pair lost ground before recovering.

The  round number of 90 is next.  This psychologically important  level  has provided support since September 2010, but has seen some action over the past few weeks.

0.8893 has been a steady support line since August 2010, as the Australian dollar put together a strong  rally which saw it  climb  above the 1.10 line.

0.8747  is the final support line for now.  This line has remained in place since July 2010.

I  am bearish on AUD/USD.

AUD/USD had a fairly quiet week, closing just below the 0.92 line. The markets will be watching the Jackson Hole conference, looking for some clues from the Federal Reserve as to QE tapering. If there any hints at a scaling down of QE, the US dollar could take off and post some strong gains against the Aussie. As well, the RBA will publish the minutes of its  most recent  policy meeting, when it reduced its key interest rate. If the minutes point to structural weaknesses in the Australian economy, we could see the Aussie take a hit.

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.