Browsing: AUD/USD Forecast

The Australian dollar reached new lows but managed to recover as the market mood improved. What’s next? The RBA Meeting Minutes stand out. Here are the highlights of the week and an updated technical analysis for AUD/USD.

Australia enjoyed a gain of 44K jobs in August, nearly triple the expectations. Another boost to the Aussie came from the trade war front. The US has not imposed new tariffs on China and negotiations have resumed. Do the talks have a fair chance? This is still to be seen, but at the moment, markets are up and the A$ rides the wave.

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

  1. CB Leading Index: Monday, 2:30. The Conference Board’s composite index is comprised of 7 separate indicators, some of them already published. The indicator advanced by 0.2% in June and will likely enjoy a similar increase in July.
  2. Monetary Policy Meeting Minutes: Tuesday, 1:30. The Reserve Bank of Australia left interest rates unchanged in its recent September meeting and did not adopt a dovish stance, contrary to the RBNZ. The meeting minutes will shed some light on the deliberations within the Canberra-based institution.
  3. HPI: Tuesday, 1:30. This official measure of house price fell by 0.7% in the first quarter of 2018. While house prices are volatile even on a quarterly basis, a second consecutive quarter of declines will be worrying. A drop of 0.7% is on the cards.
  4. MI Leading Index: Wednesday, 00:30. The Melbourne Institute uses no less than nine economic gauges for its composite measure. The gauge remained flat in July.
  5. Christopher Kent talks: Wednesday, 1:30. The RBA’s Assistant Governor delivers a speech in Sydney and about the creation of money. Any comments about the economy or changes in money creation will be of interest.
  6. RBA Bulletin: Thursday, 1:30. The quarterly report by the RBA is a long document including various statistics about the economy. The outlook for future developments is of interest.

*All times are GMT

AUD/USD Technical Analysis

Aussie/USD fell lost further ground, temporarily dipping below 0.71 (mentioned last week) before staging an impressive recovery.

Technical lines from top to bottom:

0.7480 capped the pair in mid-July and defends the round 0.75 level. 0.7420 capped the pair twice in mid-July. 0.7360 was a low point in mid-July.

0.7310 is the low of July 2018. 0.7235 was a swing low in late August and the pair attempted to reach it in mid-September.

The round number of 0.7200 was a temporary low. 0.7150 was a stepping stone on the way down in early September. 0.7085 is the 2018 trough.

Below, we are back to levels last seen in January 2017: 0.7050 could provide some temporary defense against an assault on the round 0.70 level. Even lower, 0.6880 is the next level to watch.

I am bearish on AUD/USD

The trade truce is probably temporary and the US Dollar is set to resume its rises.

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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

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