Browsing: AUD/USD Forecast

AUD/USD forecast and technical analysis ► preview of the major events that will move the Australian Dollar (A$) in the upcoming week.  Here are some general data. Scroll down for the latest AUD/USD outlook

Aussie/USD characteristics

The Aussie is a “risk-on” currency. It usually rises when commodities and stocks advance and when the risk appetite improves. Its fate deteriorates when the markets are in “risk aversion” mode: geopolitical worries increase and the outlook for global demand is sluggish.

The Aussie’s technical behavior is usually admirable. This implies respecting lines of resistance and support, diagonal trend lines, etc. AUD/USD has become more popular for techies in recent years, even after the financial crisis which brought the famous “carry trade.” to a halt.

Australia exports metals such as copper and iron. We often find a positive correlation between the price of iron ore and the Aussie $. The mining boom kept Australia out of recession for over 25 years. The land down under enjoyed the high resources demand with China playing a key role. While peak investment is probably behind us, the sector still churns out quite a lot of raw materials, as China has a soft landing.

AUD/USD Recent Moves

The Reserve Bank of Australia clarified it will not change interest rates anytime soon, but they tend to lean to cutting rates. This is due to low inflation. The labor market was looking good early in the year but now looks more complicated.

Risks could arise from the Chinese economy: Australia’s No. 1 trading partner could see a slowdown after the Party Congress in October 2017. So far, things look stable, but 2018 could be different.

Latest weekly AUD/USD forecast

The Australian dollar dipped its feet at lower ground amid many economic releases and a “risk-off” atmosphere. The upcoming week features the meeting minutes from the RBA and other figures. Here are the highlights of the week and an updated technical analysis for AUD/USD.

The Australian dollar fell alongside other commodity currencies but never went too far. An upbeat NAB figure helped it recover. The jobs report was somewhat mixed, with fewer job gains than predicted but a drop in the unemployment rate. Wages remain an issue for Australia, as they do in other places. In the US, inflation came out slightly above expectations but the dollar was hit by worries that Republicans will not be able to pass the tax cuts.

Updates:

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

  1. Monetary Policy Meeting Minutes: Tuesday, 00:30. In its latest meeting, the Reserve Bank of Australia decided not to rock the boat. In the past, the meeting minutes often revealed a bit more. Will it happen this time? If so, the move could be to the downside, as low inflation should be a source of worry for the central bank.
  2. Phillip Lowe talks, Tuesday, 9:05. The Governor of the RBA will be speaking in Sydney and may shed some light on his current views of the economy. Weaker inflation and a mixed jobs report could prompt him to lean to the dovish side, adding further pressure on the Aussie.
  3. MI Leading Index: Tuesday, 23:30. This indicator by the Melbourne Institute provides a wide view on the economy with this composite index, based on 9 figures. A small rise of 0.1% was seen in September.
  4. Construction Work Done: Wednesday, 00:30. The quarterly measure of the construction sector jumped by no less than 9.3% in Q2 2017. Nevertheless, these figures are quite volatile and prone to revisions. A drop may be seen now: -2.1% is expected.

AUD/USD Technical Analysis

The Aussie initially slipped to lower ground, slipping under 0.7625 (mentioned last week). However, it kept on fighting for quite a while.

Technical lines from top to bottom:

The psychological round level of 0.80. Below, we find 0.7940, which capped the pair in August.

0.7860 served as support during September and is another line to watch. 0.7785 was a stepping stone on the way up.

Below, we find 0.7730, that was a high point in June 2017 and also beforehand, working as resistance in November. 0.7625 was the low end of the range.

Even lower, we find 0.7565 was a low point before the pair shot higher in July. The last line, for now, is 0.7515.

I remain bearish on AUD/USD

The jobs report was not good enough to justify any meaningful rise in the pair. The meeting minutes could send it down.

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