Home AUD/USD Forecast Mar. 9-13

The Australian dollar lost 70 points last week, as AUD/USD closed at 0.7714.  This week’s major events are NAB Business Confidence and  Employment Change.  Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

The markets had expected another RBA cut last week, but the central bank held firm and maintained rates at 2.25%. In the US,  employment data was very strong, as  the US gained 295 thousand  jobs in February, beating expectations.

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

AUDUSD_Forecast Mar.9-13

  1. Chinese Trade Balance: Sunday, 2:51. Key Chinese data can have a significant impact on the movement of AUD/USD, as China is the Australia’s number one trading partner. The indicator  showed little change in the February report,  coming in at $60.6 billion.  The forecast of just $7.8 billion raised some eyebrows, as this figure was extremely low.
  2. ANZ Job Advertisements: Monday, 00:30. This indicator is an important gauge of demand for new workers – a strong increase points to an improving labor market. In January, the indicator improved by a respectable 1.3%. The markets will be hoping for another solid release in the February report.
  3. NAB Business Confidence: Tuesday, 00:30. This is the first major event of the week. The monthly indicator has been edging upwards, and reached 3 points in January. Will the upward trend continue in the February report?
  4. Chinese  CPI: Tuesday, 1:30. Chinese CPI slipped badly in January, with a reading of 0.8%. This was shy of the estimate of 1.1% and reinforces concerns that the world’s number  two economy is in a slowdown. The February estimate is expected to be mildly stronger, with the estimate standing at 1.0%.
  5. RBA Assistant Governor Christopher Kent Speaks: Tuesday, 22:05. Kent will speak at an event in Sydney. The markets will be looking for clues as to the RBA’s future monetary plans, as the central bank surprised the markets when it did not cut rates last week.
  6. Westpac Consumer Sentiment: Tuesday, 23:30. Consumer sentiment is closely linked to consumer spending, a key ingredient for economic growth. The indicator was red-hot in February, with a gain of 8.0%. Will the March report continue to point to a confident Australian consumer?
  7. Home Loans: Wednesday, 00:30. This important housing indicator bounced back in December with an excellent gain of 2.7%, beating expectations. However, the markets are expecting a sharp downturn in the January report, with a forecast of -1.9%.
  8. Chinese Industrial Production: Wednesday, 5:30. The indicator rebounded in the previous release, jumping to 7.9%, well above the forecast of 7.4%. The estimate for the upcoming report stands at 7.7%.
  9. MI Inflation Expectations: Thursday, 00:00. Analysts rely on this indicator to help gauge actual consumer inflation. The indicator climbed 4.0% in January, compared to 3.2% a month earlier.
  10. Employment Change: Tuesday, 00:30. Employment Change is a key indicator that can have a significant impact on AUD/USD. The January report was unexpectedly weak, coming in at -12.2 thousand. This was much lower than the estimate of -4.7 thousand. The markets are expecting a strong turnaround in the February release, with an estimate of +15.3 thousand. The unemployment rate rose to 6.4% in January and no change is expected in the February report.

* All times are GMT.

AUD/USD Technical Analysis

AUD/USD started the week at 0.7784 and  climbed to a high of 0.7860, as resistance held firm at 0.7904 (discussed last week).  The pair then reversed directions and  dropped to a low  of 0.7706.  AUD/USD closed the week at 0.7714.

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

Technical lines from top to bottom:

We  begin with resistance at 0.8313.  This line  has held firm since mid-December.

0.8150 is the next resistance line.

0.7978 was an important cap in January 2007.

0.7904  held firm  as the pair posted  flexed some muscle  before retracting. It is a strong resistance line.

0.7799 was tested in resistance  and could see further action early next week.

0.7692 was an important support level in early 2007. AUD/USD then posted a rally that saw the pair push above the 0.88 level.

0.7601 is the next support level.

0.7403 has held firm since May 2009. At that time, the Aussie was in the midst of a rally which saw it climb above the 0.94 line.

The final support line for now is 0.7283.

I  am  bearish on AUD/USD.

Although the Aussie avoided another RBA rate cut, the currency will likely remain under strong pressure. Unless Australian key numbers beat expectations this week, we could see AUD/USD continue to  move closer to the US 75 cents level.

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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.