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 closed the week almost unchanged. This week’s highlight is the RBA Monetary MinutesHere is an outlook on the major market-movers and an updated technical analysis for AUD/USD.

Australian business confidence data jumped, but consumer confidence numbers dipped. Employment data was lukewarm, as Employment Change missed expectations and the unemployment rate rose. In the US, retail sales looked good, but inflation levels remained low and consumer confidence slipped.

Updates:

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

AUD_USD_ Daily Chart July18-22..

  1. CB Leading Index: Monday, 14:30. This indicator is based on based on 7 economic indicators but is a minor event, as most of the data has already been released. In May, the index gained 0.5%, its strongest gain since February 2015.
  2. RBA Monetary Policy Meeting Minutes: Tuesday, 1:30. This is the key event of the week. The minutes provide details of last week’s policy meeting, where the RBA held the benchmark rate at 1.75%.
  3. MI Leading Index: Wednesday, 00:30. The index has been steady, posting two straight gains of 0.2%.
  4. NAB Quarterly Business Confidence: Thursday, 1:30. The indicator is based each quarter, magnifying the impact of each release. The indicator has recorded to consecutive gains of plus-4, which points to improving conditions. The markets will be hoping for another strong reading in Q2.

* All times are GMT

AUD/USD Technical Analysis

AUD/USD opened the week at 0.7557 and quickly touched a low of 0.7521. The pair then reversed directions and climbed to 0.7667, as resistance held firm at 0.7692 (discussed last week). AUD/USD then retracted and closed at 0.7570.

Live chart of AUD/USD:


Technical lines from top to bottom:

We begin with resistance at 0.7930.

0.7835 has provided resistance since April.

0.7692 is protecting the 0.77 line.

0.7597 remains a weak line of resistance. It could see action early in the week.

0.7438 is a strong support level.

0.7334 was a cap in December 2015.

0.7192 is providing strong support.

0.7105 has been a cushion since the end of February. It is the final support level for now.

I am neutral on AUD/USD

In the US, monetary policy is not expected to be hawkish and a rate hike appears doubtful. The markets will have to deal with the new Brexit reality, and continuing instability in the markets could weigh on the Aussie.

In our latest podcast we explain helicopter money and discuss how Carney Marked up the pound.

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