Browsing: AUD/USD Forecast

The Australian dollar had an uneventful week, as AUD/USD continues to hover just above the round number of 70. There are only three events in the upcoming week. Here is an outlook for the highlights of this week and an updated technical analysis for AUD/USD.

The RBA held the benchmark rate at 1.50%, as expected. GDP for Q4 disappointed, as the gain of 0.2% was the lowest since 2016. Retail sales posted a weak gain of 0.1%, shy of the estimate of 0.3%. In the U.S., nonfarm payrolls plunged to 20 thousand, much worse than the forecast of 180 thousand. There was better news from wage growth, which gained 0.4%, above the estimate of 0.3%.

In the U.S., nonfarm payrolls plunged to 20 thousand, much worse than the forecast of 180 thousand. Wage growth improved to 0.4%, above the estimate of 0.3%.

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

  1. NAB Business Confidence: Tuesday, 00:30. The National Australia Bank business confidence gauge has been fairly steady since October. Confidence edged up to 4 in January, up from 3 a month earlier.
  2. Westpac Consumer Sentiment: Tuesday, 23:30. This indicator tends to have strong swings. Consumer confidence rebounded in February with a gain of 4.3%, after a decline of 4.7% in January.
  3. MI Inflation Expectations: Thursday, 00:00. Inflation expectations is a useful gauge for tracking actual inflation data. The indicator improved to 3.7% in January, up from 3.5% a month earlier.

*All times are GMT

AUD/USD Technical Analysis

AUD/USD headed lower throughout the week, breaking below support at 0.7085 (mentioned last week). The pair reversed directions on Friday and posted slight gains

Technical lines from top to bottom:

We start with the round number of 0.74, 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 marked a low point in the first week of December.

Lower, 0.7165 was a swing low after a recovery in mid-November. 0.7085 was a low point in September and protected the symbolic round number of 0.70.

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 is showing signs of weakness, with analysts raising the possibility of a rate cut from the RBA if matters don’t improve soon. The U.S.-China trade spat has led to a slowdown in China, and this has in turn dampened Australian growth, as China is Australia’s largest trading partner.

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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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