Browsing: AUD/USD Forecast

AUD/USD showed volatility and gained about 1.0% last week. The markets will be keeping a close eye on the RBA minutes, Australian employment data and Chinese GDP. Here is an outlook for the highlights of this week and an updated technical analysis for AUD/USD.

The pair recorded its highest weekly close since the end of January, ending the week at 0.7172. Australia’s Westpac consumer sentiment posted a respectable gain of 1.9%, a sign that the recent budget has been well-received by consumers. In China, CPI rose to 2.3% in March, marking a 5-month high. This has raised hopes that the Chinese economy might be rebounding after suffering a slowdown due to the trade war with the U.S.

There was good news from U.S. inflation numbers, which improved in March. CPI, the key gauge of consumer spending, climbed to 0.4%, its highest gain since January 2018. The producer price index also looked strong, climbing 0.6%, marking a 5-month high.

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

  1. RBA Monetary Policy Meeting Minutes: Monday, 21:30. The minutes provide details of the views of the decision-making process at the April policy meeting. At that meeting, the RBA held the benchmark rate at 1.50% and noted that growth had slowed and downside risks had increased.
  2. Chinese GDP: Monday, 22:00. The Chinese economy has been slowing down since early 2018, although growth levels remain very high. The economy expanded 6.4% in Q4. The downward trend is expected to continue in Q1, with an estimate of a 6.3% gain.
  3. Ml Leading Index: Tuesday, 20:30. The Melbourne Institute index is a useful gauge of economic activity. The indicator has been muted, failing to record a gain since November. The past two releases have come in at a flat 0.0%.
  4. Employment Data: Wednesday, 21:30. The economy created 4.6 thousand jobs in February, compared to 39.1 thousand a month earlier. Better news is expected in March, with an estimate of 15.2 thousand. The unemployment rate dipped to 4.9% in February, the first time it has fallen below the 5.0% level since 2012. The estimate for March stands at 5.0%.

*All times are GMT

AUD/USD Technical Analysis

Technical lines from top to bottom:

0.7480 marked the high point of the pair in mid-July and defends the round 0.75 level.

The round number of 0.74 was the high point reached at the wake of December. This is followed by 0.7340, which the pair breached in late November.

0.7315 was a swing high seen in late September. Further down, 0.7240 separated ranges in September and in October.

0.7190 (mentioned last week) was tested late in the week. It had held in resistance since late February.

Lower, 0.7165 was a swing low after a recovery in mid-November. 0.7085 was a low point in September and remained relevant during the week.

Close by, 0.6970 played a role back in January 2017.

Below, 0.6825 supported the pair in late 2016 and early 2017.

0.6744 was a low point in January.

0.6686 was an important cap back in January 2000. It is the final support line for now.

I am bearish on AUD/USD

The Australian economy has been hurt by the slowdown in China, Australia’s largest trade partner. The RBA has maintained interest rate levels, but there have been calls for the RBA to lower rates in order to stimulate the economy. Trade talks between China and the U.S. continue, but last week a senior U.S. official said that an agreement could be months away.

Follow us on Sticher or iTunes

Further reading

Safe trading!

Get the 5 most predictable currency pairs

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

1 2 3 51