AUD/USD showed strength last week, gaining 1.1 percent. The upcoming week has seven events. Here is an outlook at the highlights and an updated technical analysis for AUD/USD.
There was positive news from Australia’s manufacturing sector, as the AIG Manufacturing Index improved to 51.5 in June. This marked its first reading in expansion territory since March. The 50-level separates contraction from expansion. Australia’s trade surplus narrowed to A$8.03 billion, down from A$8.80 billion a month earlier. Consumer spending has jumped, as retail sales climbed 16.9% in May. This follows a gain of 16.3% in June.
- MI Inflation Gauge: Monday, 1:00. The Melbourne Institute inflation gauge provides a monthly look at inflation. The index declined by 1.2% in May, as inflation remains at weak levels. We now await the June data.
- AIG Services Index: Monday, 22:30. The services sector continues to show significant contraction. The index came in at 31.6 points in May, up from 27.1 beforehand. Will the upswing continue in June?
- RBA Rate Decision: Tuesday, 4:30. The RBA is expected to maintain the cash rate at 0.25%, where it has been pegged since March. Investors will be carefully combing the rate statement, looking for clues as to future monetary moves. With AUD/USD soaring 12% in Q2, policymakers will have to give some thought to raising rates to keep a lid on the value of the Aussie.
AUD/USD Technical Analysis
Technical lines from top to bottom:
We start with resistance at 0.7250.
0.7165 has held firm since early April. 0.7085 is next.
0.6960 is protecting the 0.70 line, which has psychological significance. This line is under pressure.
0.6825 (mentioned last week) has some breathing room in support following strong gains from AUD/USD this week.
0.6744 was a low point in January.
0.6627 has provided support since late May. It is the final support line for now.
I am neutral on AUD/USD
The Australian dollar has surprised many with its huge gains in recent months? The US dollar has sagged, but with the US economy showing signs of recovery, investors may want to piggyback on the greenback. At the same time, China’s economy is also improving, which is a bullish sign for the Australian dollar.
- EUR/USD forecast – for everything related to the euro.
- GBP/USD forecast – Pound/dollar predictions
- USD/JPY forecast – projections for dollar/yen
- USD/CAD forecast – Canadian dollar analysis
- Forex weekly forecast – Outlook for the major events of the week.