Browsing: AUD/USD Forecast

The Australian dollar struggled at the 0.70 handle but did not fall off. It now faces the jobs report, Chinese GDP and more. Here are the highlights of the week and an updated technical analysis for AUD/USD.

Stocks markets tumbled down and this adverse atmosphere weighed on the Australian Dollar, a risk currency. OK Chinese trade balance numbers and USD weakness that was partly a result of unimpressive inflation figures weighed on the Aussie.

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

  1. Monetary Policy Meeting Minutes: Tuesday, 00:30. The Reserve Bank of Australia left the interest rate unchanged in early October, as it did in over two years. The minutes from the decision may reveal more about the RBA’s thoughts about the global economy, housing in Sydney, and other topics that affect monetary policy.
  2. Guy Debelle talks: Tuesday, 21:20. The Assistant Governor at the RBA will speak in Sydney and will speak about the labor market, in a very timely fashion, just over a day before the jobs report. Debelle is unlikely to hint about the data, but may provide information about what the RBA seeks to see in the labor market.
  3. Australian jobs report: Thursday, 00:30. The economy of the land down under saw an impressive increase of 44K in August, significantly above expectations. The report for September is projected to show a modest increase of 15.2K positions, more aligned with the averages of recent years. The unemployment rate is expected to remain unchanged at 5.3%. The Australian job market is doing well despite some hiccups in the housing sector and fears about China.
  4. NAB Quarterly Business Confidence: Thursday, 00:30. The National Australia Bank releases a quarterly figure in addition to the monthly one. In the past couple of years, the number stood at either 7 or 8 according to the revised data. After a score of 7 in Q2, it will be interesting to see if business confidence drops this time.
  5. Chinese GDP: Friday, 2:00. The world’s second-largest economy publishes its GDP very early after the quarter ends. While many raise their eyebrows at the accuracy of the data, it still moves markets. A very modest slowdown is projected for Q3: 6.6% annualized against 6.7% in Q2. Some fear that the tariffs may have caused and may cause more severe disruptions, impacting the whole world.

*All times are GMT

AUD/USD Technical Analysis

Aussie/USD struggled and hit a new low at 0.7040 before recovering and getting rejected only at 0.7150 (mentioned last week).

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. 0.7240 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. 0.7040 was the low point in mid-October and the last defense before the round number of 0.70.

The round number of 0.70 is closely watched by many market participants. Close by, 0.6970 played a role back in January 2017. Below, the only noteworthy level is only 0.6825 that supported the pair in late 2016 and early 2017.

I remain bearish on AUD/USD

The weakness in stocks and in the Chinese economy could weigh on the Aussie once again. Monetary policy divergence favors the USD over the AUD.

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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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