Browsing: AUD/USD Forecast

The Aussie suffered from the dollar’s strength in the past week. The upcoming week is packed with Aussie related figures. Here’s an outlook for the events that will move the Aussie, and an updated technical analysis for AUD/USD.

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

AUD USD Forecast

The Aussie lost the important 0.9090 line that it broke above on March 8th. Although it put up a fight, the greenback’s strength was probably too much for it. OK, let’s start the review. The technical analysis will follow:

  1. HIA New Home Sales: Publication time unknown at the moment. House prices are rather volatile in Australia. The Housing Industry Association reported a big leap in prices last month – 9.5%. This followed a small drop. A smaller rise is expected this time.
  2. Guy Debelle talks: Starts speaking on Tuesday at 2:00 GMT. Dr. Guy Debelle speaks once again, and can hint on the rate decision in the following week. There’s no consensus on the decision, after it rose to 4% last time. So, his word will probably shake the markets.
  3. Retail Sales: Published on Wednesday at 00:30 GMT. Consumer behavior has been quite a see-saw in Australia, but they have been on the rise in most months. Last month’s nice rise of 1.2% will probably be followed by a 0.3% rise this time.
  4. Building Approvals: Published on Wednesday at 00:30 GMT and overshadowed by retail sales. Also this figure has been “wild” recently. rises of over 5% and over 10% were followed by a dive of 7%. Economists continue to be expect more moderate moves – a rise of 2.2% is predicted this time.
  5. Private Sector Credit: Published on Wednesday at 00:30 GMT, and overshadowed by the previous releases. Credit has been on the rise in recent months – with very steady moves here. Last month’s rise of 0.4% is expected to be followed with a rise of the same size. This is a volatile time for AUD/USD.
  6. AIG Manufacturing Index: Published on Wednesday at 22:30 GMT. The Australian Industry Group showed that manufacturing is expanding in the past two months. This index, with scores similar to PMI, rose to 53.8 points, the highest level in over two years. This result will probably be repeated.
  7. MI Inflation Gauge: Published on Wednesday at 23:30 GMT. Economists at the Melbourne Institute have seen inflation ease to the lowest level in 5 months – only 0.1%. Stronger inflation, as seen in the last CPI release, is necessary for seeing further rate hikes. A similar rise is predicted this time.
  8. Trade Balance: Published on Thursday at 00:30 GMT. Australia’s deficit has been below expectations in the past few months, aiding the currency. This time, the deficit is predicted to widen from 1.18 to 1.37 billion. A better result will boost the Aussie.
  9. Chinese Manufacturing PMI: Published on Thursday at 1:00 GMT. After reaching a peak at 56.6 points, purchasing managers in China’s manufacturing sector eased their expectations, and the index fell to 52 points, still above the 50 mark – still expecting economic expansion. A rise back to 55.2 points is predicted now. China is Australia’s main trade partner, and Chinese strength kept the Aussie higher in the past year.
  10. Commodity Prices: Published on Thursday at 5:30 GMT. Australia’s commodity-oriented economy is enjoying the recovery in prices. This year-over-year indicator showed an annual drop of 9.7% last time, the lowest since April 2009. A smaller drop is predicted this time.

AUD/USD Technical Analysis

The Aussie failed to break above the 0.92 line at the beginning of the week, and it began deteriorating from there, eventually losing the important 0.9090 support line that it struggled to break on March 8th.

Some line were modified since last week’s outlook. The current range of AUD/USD is between the 0.9090 line, that turned back to a resistance line, and 0.8980 – a support line a few weeks ago and also now.

Looking above, 0.92 is the next resistance line, but quite a minor one. Even higher, 0.9327 is a strong resistance line that the Aussie tested several times in recent months. 0.94, the 2009 high is above.

Looking down below 0.8980, 0.8735 is the next important support line. It was December’s low. Even lower, the 0.8567 line is the 2010 low and also served as a support line in the past.

I am neutral on AUD/USD.

Australia has an excellent economy, and this is seen in the strong job market. Nevertheless, when the US dollar shows such strength, the Aussie cannot rise.

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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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