Browsing: AUD/USD Forecast

Like other currencies, the Aussie surrendered to the dollar before and after the NFP. The upcoming week brings important employment figures among other events. Here’s an outlook for the events in Australia and an updated AUD/USD technical analysis.

AUD/USD chart with support and resistance lines marked on it. Click to enlarge:

The Aussie suffered from a disappointing rate decision. Glenn Stevens left the rates unchanged at 3.75%, weakening the Aussie, despite the good fundamentals of the Australian economy, with employment being strong. This week we’ll get fresh job data. Let’s start:

  1. NAB Quarterly Business Confidence: Publication time is unknown. The release has been delayed. National Bank Australia release a quarterly figure in addition to a monthly one. 1,000 businesses are asked about the economic conditions. In Q3, this number rose above 0, meaning improving conditions. It’s expected to be positive also for Q4.
  2. Westpac Consumer Sentiment: Published on Tuesday at 23:30 GMT. This survey, done also with the Melbourne Institute, checks the pulse of he consumers. After two months of drops, this indicator posted a nice rise last month – 5.6%. This time, the number will probably be closer to 0.
  3. Home Loans: Published on Wednesday at 00:30 GMT. The housing sector has a strong impact on the economy and has showed a slowdown in the past two months. Last month’s disappointing drop of 5.6% is expected to be followed by a similar 4.7% fall this time – low expectations indeed.
  4. MI Inflation Expectations: Published on Thursday at midnight GMT. Rising inflation didn’t convince the central bank to raise the rates. We’ll now get another, unofficial look, courtesy of the Melbourne Institute. The past few months have seen stable price expectations from consumers – 3.5%. A more significant rise is necessary for a rise.
  5. Employment Data: Published on Thursday at 00:30 GMT. Australia enjoys a healthy job market. Last month’s numbers were great, with the unemployment rate dipping to 5.5%, the lowest in 8 months. This time it’s predicted to edge back up to 5.6%. The accompanying and no less important figure, Employment Change, has shown better-than-expected gains in the past four months, including 35,200 jobs gained last month. But now, economists are careful again, and expect a gain of 15,100 jobs.

AUD/USD Technical Analysis

After closing last week’s trade under 0.8950, the Aussie continued south. During most of the week it traded in a range between 0.8950 and safely above 0.8735, December’s low. After this line was breached, AUD/USD fell as low as 0.8578, very close to the 0.8567 support line, closing at 0.8670.

Looking below 0.8567, which was October’s low, 0.8477 is the next line of support. It served as a strong resistance line during the summer, before the Aussie broke upwards. This is an important line.

Even lower, 0.8240 was the resistance line beforehand, and also worked as a support line before the next push upwards. Given the new low levels, I had to add new lines on last week’s outlook.

Looking up, there are many lines now. 0.8735 is the first line of resistance, followed by the mighty 0.8950. Higher, 0.9090 is a minor resistance line, followed by 0.9170. 0.9322 is the next line, and it’s very strong. These areas were seen just a few weeks ago, and now seem far away.

I am neutral on AUD/USD.

The Aussie sure lost its mojo after the disappointing rate decision. I believe that strong employment figures will keep from more falls during this week.

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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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