Browsing: AUD/USD Forecast

AUD/USD lost ground for a third successive week and the pair closed below the 0.69 level for the first time since early December. There are seven releases in the upcoming week. Here is an outlook at the highlights and an updated technical analysis for AUD/USD.

In Australia, the Melbourne Institute Inflation Gauge rose by 0.3% in December, its highest level in five months. Chinese GDP for Q4 was unchanged at 6.0 percent. The Chinese economy grew by 6.1% in 2019, its lowest annual growth rate since 1990.
It was a busy week in the U.S. after the recent holiday period. Retail sales, the primary gauge of consumer spending, were positive in December. The headline reading improved to 0.3%, up from 0.2% a month earlier. Core retail sales impressed with a gain of 0.7%, above the estimate of 0.5%. The strong numbers were a result of a late-holiday shopping spree by consumers. Consumer inflation has been losing ground and remains below the Federal Reserve target of 2.0 percent. The downturn continued in December. CPI slowed to 0.2%, compared to 0.3% a month earlier. Core CPI dipped to 0.1%, down from 0.2%.
AUD/USD daily graph with support and resistance lines on it. Click to enlarge:
  1. Westpac Consumer Sentiment: Tuesday, 23:30. Consumer confidence in the economy remains weak, as the slowdown in the Chinese economy has hurt the Australia economy. The indicator declined by1.9% in December, its third decline in the past four months. Will we see a rebound in January?
  2. CB Leading Index: Wednesday, 15:30. The index, based on 7 economic indicators, recorded a small gain of 0.2% in October. We will now receive the November data.
  3. MI Inflation Expectations: Thursday, 0:00. This is a useful gauge for tracking inflation, as inflation expectations often translate into actual inflation readings. The index has posted strong gains of 4.0% in the past two readings.
  4. Employment Report: Thursday, 0:30. Employment change sparkled in November, as the economy created 39.9 thousand jobs, crushing the estimate of 14.5 thousand. The December forecast stands at 11.2 thousand. The unemployment rate is expected to remain unchanged at 5.2 percent.
  5. Manufacturing PMI: Thursday, 22:00. The manufacturing sector has been hurt by the U.S.-China trade war and the PMI has posted back-to-back readings below the 50-level, which separates contraction from expansion. We now await the December reading.
  6. Services PMI: Thursday, 22:00. The services sector has also been in decline, with two straight readings of 49.5 pts. Will we see an improvement in the January release?

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 has been a resistance line since July. This is followed by 0.7022.

0.6960 has acted in resistance since the first week in January, when AUD/USD went on a sharp slide.

0.6865 (mentioned last week) is an immediate support level. It could see action early in the week.

0.6744 is next.

0.6627 has held in support since March 2009.

0.6456 is the final support line for now.

I am bearish on AUD/USD

It’s been a rough start to the New Year, as the Australian dollar is down over 2 percent. Risk appetite has improved since the flare-up between the U.S. and Iran, but the Aussie hasn’t been able to reverse its January slide.

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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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