Browsing: AUD/USD Forecast

AUD/USD enjoyed an excellent week, climbing over 1.0%. It was the pair’s sharpest one-week gain since late October. There are five events on the schedule. Here is an outlook at the highlights and an updated technical analysis for AUD/USD.

The RBA maintained the benchmark rate at 0.75%, as expected. The bank said it “continues to monitor developments” and has left the door open to rate cuts in 2020. Australian GDP ticked lower to 0.4% in Q3, down from 0.5% in the second quarter. Retail sales slowed to zero in September, down from 0.2% a month earlier.
In the U.S., there were no surprises from PMI reports, which showed expansion in the services sector, while the manufacturing industry continues to contract. In November, the ISM Manufacturing PMI ticked lower to 48.1, while the Non-Manufacturing PMI slowed to 53.9 pts. There was better news on Friday from key employment reports. Nonfarm payrolls soared to 266 thousand, up from 128 thousand a month earlier. Wage growth remained steady at 0.2%, just shy of the forecast of 0.3%. As well, the unemployment rate dropped from 3.6% to 3.5%. This beat the forecast of 3.6%. On the consumer front, UoM Consumer Sentiment climbed to 99.2, up sharply from 95.7 a month earlier.
AUD/USD daily graph with support and resistance lines on it. Click to enlarge:
  1. HPI: Tuesday, 0:30. The House Price Index is released on a quarterly basis. The index declined by 0.7% in the second quarter and hasn’t posted gains since Q4 of 2018. The estimate for Q3 stands at 0.5%. 
  2. NAB Business Confidence: Tuesday, 0:30. Business confidence improved to 2 pts in October, up from zero a month earlier. Will the uptrend continue?
  3. Westpac Consumer Sentiment: Tuesday, 23:30. Consumer confidence rebounded with a gain of 4.5%, after two successive declines. We will now receive the December release.
  4. Chinese New Loans: Wednesday, 11th-15th. Credit levels are an important gauge of economic activity. In October, the indicator slumped to 661 billion yuan, down from 1690 billion a month earlier. Analysts are expecting a strong rebound in November, with an estimate of 1200 billion.
  5. MI Inflation Expectations: Thursday, 0:00. Inflation expectations often translate into actual inflation figures, so this Melbourne Institute indicator is closely watched by investors. The indicator improved to 4.0% in October, its highest level since February. 

*All times are GMT

Technical lines from top to bottom:

0.7165 has held firm since early April.

0.7085 has held since July. This is followed by 0.7022.

0.6960 is protecting the symbolic 70 level.

0.6865 (mentioned last week) is under pressure in resistance after strong gains by AUD/USD last week.

0.6744 is providing support.

0.6686 was tested in the first week of October.

0.6627 has held in support since March 2009. This is followed by 0.6532.

0.6456 is the final support level for now.

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I remain bearish on AUD/USD

The RBA held off from another rate cut, but the Australian economy has not been particularly strong. A trade deal between the U.S. and China remains elusive, which is weighing on investor risk appetite and making the Aussie less attractive to investors.

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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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