Browsing: AUD/USD Forecast

AUD/USD forecast and technical analysis ► review of the major events that will move the Australian Dollar (Aussie) during the upcoming week.  Here is some general information. Scroll down for the latest AUD/USD outlook

Aussie/USD characteristics

The Australian dollar is a “risk” currency. It tends to do well when commodities and stocks rise and when the mood improves. It tends to fall when things get worse: geopolitical risks increase and the outlook for global demand slumps.

The A$’s technical behavior is usually very impressive. This implies respecting lines of support and resistance, trend lines, etc. AUD/USD has become more popular for techies in recent years, even after the financial crisis which saw the end of the famous “carry trade.”

Australia exports commodities, mostly of metals such as iron and copper. We often find a correlation between the price of iron ore and the A$. The commodity boom kept Australia out of recession for around 25 years. The land down under enjoyed the mining boom related to Chinese growth. While the mining boom has probably peaked regarding growth, the sector still churns out quite a lot, as China has a soft landing.

AUD/USD Recent Moves

Interest rates have been dropping in recent years, after an early post-crisis hike cycle. However, it seems that the new governor of the RBA, Philip Lowe, is not keen to take them lower.. Chinese data releases (such as the Caixin PMI) are having a growing influence once again, especially as they impact iron prices.

The days of AUD/USD parity are gone. Among the 6 factors impacting the Aussie the bears seem to have the upper hand.

Latest weekly AUD/USD forecast

AUD/USD jumped above the 0.77 line last week, but was unable to consolidate at these levels. The pair ended the week with small losses, closing at 0.7539. This week’s key event is Employment ChangeHere is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

The ISM Non-Manufacturing PMI sagged to 51.4 points, its worst showing since 2010. The Australian dollar briefly gained ground after the RBA maintained the benchmark interest rate. Australian GDP expanded 0.5%, close to forecast of 0.6%.

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

audusd_-daily-chart-sep12-16

  1. RBA Assistant Governor Christopher Kent Speaks: Monday, 22:30. Kent will deliver remarks at an event in Sydney. A speech that is more hawkish than expected is bullish for the Australian dollar.
  2. NAB Business Confidence: Tuesday, 1:30. The indicator slipped to plus-4 in July, compared to plus -6 a month earlier. Will business confidence reverse directions and move higher in the August release?
  3. Chinese Industrial Production: Tuesday, 2:00. Chinese key releases can have a strong impact on the Aussie, as the Asian giant is Australia’s largest trading partner. The indicator dipped to 6.0% in July within expectations. The estimate for the August release is 6.2%.
  4.  Westpac Consumer Sentiment: Wednesday, 00:30. Consumer Sentiment gained 2.0% in September, after two straight declines. The markets will be hoping for another gain in September.
  5.  RBA Assistant Governor Guy Debelle Speaks: Wednesday, 9:50. Debelle will speak at an event in London. The markets will be looking for clues regarding the RBA’s future monetary policy.
  6. MI Inflation Expectations: Thursday, 1:00. This indicator helps analysts predict actual inflation numbers. The indicator dropped to 3.5% in July, down from 3.7% a month earlier.
  7. Employment Change: Thursday, 1:30. Employment Change is one of the most important indicators, and an unexpected reading can have a sharp impact on the direction of AUD/USD. Australia added 26.2 thousand jobs in July, crushing the forecast of 10.2 thousand. The August reading is expected to be softer, with an estimate of 15.2 thousand. The unemployment rate is expected to remain at 5.7%.

AUD/USD Technical Analysis

AUD/USD opened the week at 0.7564. The pair dropped to a low of 0.7532 early in the week and then posted strong gains, climbing to 0.7732, testing support at 0.7692 (discussed last week). AUD/USD ended the week with sharp losses and closed the week at 0.7539.

Live chart of AUD/USD:

Technical lines from top to bottom:

We start with resistance at 0.7938.

0.7835 has provided resistance since April.

0.7692 was tested last week as the pair posted strong gains before dropping sharply.

0.7597 remains an immediate resistance line and could see action early in the week.

0.7513 was a cap in May and June.

0.7438 is the next support level.

0.7334 was a cap in December 2015.

0.7192 is next.

0.7105 is the final support level for now.

I remain bearish on AUD/USD

Despite some soft Q3 data of out the US, there is a reasonable chance that the Fed will raise rates in December, so sentiment towards the greenback remains bullish.

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