For a third straight week, AUD/USD closed the week almost unchanged. The pair ended the week at 0.7656. This week’s key event is GDP. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.
US data was generally positive last week and the FOMC’s minutes were slightly dovish but still upbeat about the economy. However, the Trump administration is yet to outline its economic agenda. In Australia, the RBA minutes were optimistic about near-future economic conditions.
[do action=”autoupdate” tag=”AUDUSDUpdate”/]AUD/USD daily graph with support and resistance lines on it. Click to enlarge:
- Company Operating Profits: Monday, 00:30. The indicator dropped to 1.0% in Q3, short of the estimate of 3.1%. The markets are expecting a strong rebound in Q4, with a forecast of 8.0%.
- HIA New Home Sales: Tuesday, 00:00. This indicator gauges the strength of the housing sector. In December, the indicator dropped to 0.2%, after a strong gain of 6.1% a month earlier.
- Current Account: Tuesday, 00:30. Australia’s current account deficit narrowed to C$11.4 billion in Q3, beating the estimate of a deficit of C$13.6 billion. The deficit is expected to drop to just C$4.1 billion in Q4.
- AIG Manufacturing Index: Tuesday, 22:30. The index slipped to 51.2 in January, pointing to stagnation. This marked the lowest reading in three months.
- GDP: Wednesday, 00:30. GDP is one of the most important indicators, and an unexpected reading can have a sharp effect on the movement of AUD/USD. GDP recorded a rare decline in Q3, missing the estimate of 0.2%. The markets are expecting a strong gain of 0.7% in the Q4 report.
- Commodity Prices: Wednesday, 5:30. Commodity Prices continues to post gains. In February, the indicator improved to 55.7% in February.
- Building Approvals: Thursday, 00:30. This indicator tends to show strong fluctuation, making accurate estimates a tricky task. In December, the indicator declined 1.2%, above the estimate of -1.7%. Another decline is expected in January, with an estimate of -0.4%.
- Trade Balance: Thursday, 00:30. Australia’s trade surplus improved to A$3.51 billion in December, beating the forecast of A$2.00 billion. The upward trend is expected to continue in January, with an estimate of $A3.82 billion.
- AIG Services Index: Thursday, 22:30. The index dropped to 54.5 in January, down from 57.7 a month earlier. The indicator has now been above the 50-point level, which differentiates between expansion and contraction, for four straight months.
AUD/USD Technical Analysis
AUD/USD opened the week at 0.7666. The pair climbed to a high of 0.7741 late in the week before retracting and dropping to a low of 0.7648. This tested support at 0.7691(discussed last week). AUD/USD closed the week at 0.7656.
Live chart of AUD/USD:
Technical lines from top to bottom:
We begin with resistance at 0.8066. This line was a low point in May 2010.
0.7938 is next.
0.7835 has held firm since April 2016.
0.7691 remains busy and was tested in resistance last week. It is a weak line.
0.7513 continues to provide support. This line was a cushion in April 2015.
0.7427 is next.
0.7311 marked a low point in November.
0.7223 is the final support level for now.
I am bearish on AUD/USD
The markets remain uneasy over Donald Trump, as the administration’s first month in office has been beset by crises and difficulties in filling key cabinet positions. Still the US economy is doing well and there is a strong likelihood of a rate hike in the first of 2017.
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Further reading:
- For a broad view of all the week’s major events worldwide, read the USD outlook.
- For EUR/USD, check out the Euro to Dollar forecast.
- For the Japanese yen, read the USD/JPY forecast.
- For GBP/USD (cable), look into the British Pound forecast.
- For the Canadian dollar (loonie), check out the Canadian dollar forecast.
- For the kiwi, see the NZD/USD forecast.
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