Browsing: AUD/USD Forecast

AUD/USD traded between support and resistance lines. It enjoyed the big hint of RBA Governor Stevens regarding a rate hike, but didn’t stop the greenback bulls. Here’s an outlook for this week’s 4 Australian events, and a technical analysis for AUD/USD.

AUD/USD forex graph with support and resistance lines marked:

AUD/USD Technical Analysis August 2009

Despite holding a rather high-interest rate, Glenn Stevens sees the end of stimulus efforts, and even raising interest rates, or “bringing them back to normal”, in his words.

  1. Monetary Policy Meeting Minutes: Australia has the highest interest rates in the West, 3%, and the RBA recently decided to keep them that way. On Tuesday at 1:30 GMT, we’ll get a chance to see what the RBA seniors were discussing, and if they think of raising the rates sooner than later, as Glenn Stevens hinted.
  2. Malcolm Edey speaks: RBA Assistant Governor  Dr. Malcolm Edey will speak in a conference in Sydney, and might shed some more light on Stevens’ testimony last week. This important speech, titled “Examining the Impact of the Global Financial Crisis on Retail Financial Services in Australia” will take place on Tuesday at 23:20 GMT.
  3. MI Leading Index: 9 economic indicators are combined into the Leading Index published by the Melbourne Institute. After two positive months, this index fell by 0.2% last time. Will it get back up? Answers are due on Wednesday at 1:00 GMT.
  4. RBA Monthly Bulletin: Yes, another verbal indicator is with us this week from the land down under. Despite being released after the Monetary Policy Meeting Minutes and the RBA heads’ important speeches, this array of articles outlines the economic situation from the RBA’s perspective, and this might hint on future interest rate decisions. Published on Thursday at 1:30 GMT.

AUD/USD Technical Analysis

The Aussie began the week by stepping down. During the early hours of Tuesday it broke the minor support line at .08230, but his move, during the Asian session, proved to be a false break. Not only did AUD/USD climb back up, it also made nice gains, reaching 0.8477 at the peak. But Friday’s dollar bulls didn’t skip the Aussie, and it finally closed at 0.8323, not far from last week’s close.

There are no major changes since last week’s AUD/USD Outlook. 0.85 continues to be a firm resistance line. It was reinforced this week. IF AUD/USD breaks upwards, the next line is at 0.8830, quite far out.

Looking down, the false break of 0.8230 also reinforces this support line. Below that, only the vicinity of 0.77 is a major support line.

On one hand, the Australian economy is strong and might see a rate hike sooner than later. On the other hand, the dollar bulls seem strong. I have a slight tendency towards the Aussie, but it first needs to break 0.85.

Further reading:

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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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