Browsing: AUD/USD Forecast

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

AUD/USD posted losses for a second straight week, closing at 0.7485. This week’s key event is the RBA Rate Statement. Here is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

It was a disappointing week in the US. GDP grew by an annualized rate of 0.7% in the first quarter, weaker than expected and the lowest in three years. As well, durable goods orders and consumer confidence missed expectations.

Updates:

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

  1. AIG Manufacturing Index: Sunday, 23:30. This minor indicator continues to show expansion, but dipped to 57.5 in March.
  2. MI Inflation Gauge: Monday, 1:00. This monthly indicator helps analysts predict CPI, which is released on a quarterly basis. The index posted a small gain of 0.1% in March.
  3. Commodity Prices: Monday, 6:30. Commodity prices have posted strong gains in Q1. In March, the indicator came in at 50.1%, down from 56.0% a month earlier.
  4. Chinese Caixin Manufacturing PMI: Tuesday, 1:45. This Chinese indicator continues to show slight expansion. In March, the index dipped to 51.2, short of the estimate of 51.8 points. Little change is expected in the August report.
  5. RBA Cash Rate: Tuesday, 4:30. The RBA will release its rate statement, with the RBA expected to hold rates at 1.50%. The rate has been pegged at this level since August 2016.
  6. AIG Services Index: Tuesday, 23:30. The indicator rebounded in March, with a reading of 51.7 points. This points to slight expansion in the services sector.
  7. HIA New Home Sales: Thursday, 1:00. This indicator provides a gauge of the level of activity in the housing sector. The indicator rebounded in February, with a slight gain of 0.2%.
  8. Trade Balance: Thursday, 1:30. Australia’s trade surplus jumped to AUD 3.57 billion in February, well above the forecast of AUD 1.75 billion. The estimate for the March report is AUD 3.33 billion.
  9. RBA Governor Philip Lowe Speech: Thursday, 3:10. Lowe will deliver remarks at an event in Brisbane. A speech which is more hawkish than expected is bullish for the Australian dollar.
  10. AIG Construction Index: Thursday, 23:30. The indicator dipped to 51.2 in March, pointing to slight expansion in the construction sector.
  11. RBA Monetary Policy Statement: Friday, 1:30. This quarterly report discusses the RBA’s view of economic conditions and inflation. Analysts will be looking for clues as to future monetary policy.

AUD/USD Technical Analysis

AUD/USD opened the week at 0.7556 and quickly climbed to a high of 0.7585. The pair then reversed directions and dropped to a low of 0.7439, breaking support at 0.7513 (discussed last week). The pair closed the week at 0.7485.

We start with resistance at 0.7938. This line has held since May 2015.

0.7835 was the high point in April 2016.

0.7741 was a cap in February.

0.7605 has strengthened in resistance as AUD/USD lost ground last week.

0.7513 remains busy. It has switched to a resistance role.

0.7429 is an immediate support role.

0.7311 marked a low point in November.

0.7223 is the next support line.

0.7105 has held since March 2016. It is the final support level for now.

I am bearish on AUD/USD

The US economy has hit a bump, underscored by the weak Advance release report for Q1. Still, the Fed is likely to raise rates another two times in 2017, which is bullish for the US dollar.

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