AUD/USD news
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AUD/USD forecast for the week of December 1, 2014
The AUD/USD pair broke down during the course of the week, testing the 0.85 level. Because of this, we feel that the market does eventually go lower but we need to break down below the bottom of the range for the week in order to start selling. Alternately, if we rally from here we are looking for resistive candles above in order to take advantage of value in the US dollar. We also believe that the 0.88 level above is the ceiling at the moment, so we are looking for selling opportunities all the way up to that level.
AUD/USD: Aussie Vulnerable Before Employment Data
The aussie dollar neglected correcting commodity prices on Wednesday, as traders wait for the Australian employment data due in a couple of hours.
The aussie was down 0.18% at $0.8149, close to its one-week low at $0.8068, where it tumbled earlier due to weakening copper and oil prices.
Thursday's official employment figures are expected to show the jobless rate held steady at 6.3% in December, just shy of the highest rate seen in Australia over the past 12 years.
Analysts are forecasting a 5,000 uptick in net job growth last month, far below the previous month's 42,700 jobs which was largely driven by part-time work.
Technical analysis
Another leg down of the sharp sell-off has been replaced by stabilization and the aussie is now trying to make a correction base around $0.81.
The current intraday picture shows that a target for shorts is around the previously respected double bottom area at $0.8032, and if this spot cracks we will see the currency cross at or below $0.8000.
A strong resistance now works at a level of $0.8250, which stopped the previous spike on Monday.
AUD/USD weekly outlook: January 19 - 23
The Australian dollar edged higher against its U.S. counterpart on Friday, as investors digested a mixed bag of U.S. data.
AUD/USD rose to 0.8294 on Thursday, the pair's highest since December 12, before subsequently consolidating at 0.8228 by close of trade on Friday, up 0.18% for the day and 0.31% higher for the week.
The pair is likely to find support at 0.8067, the low from January 14, and resistance at 0.8294, the high from January 15.
In a preliminary report, the University of Michigan said Friday that its consumer sentiment index rose to 98.2 this month, the highest level since January 2004, from 93.6 in December, compared to expectations for a rise to 94.1.
However, a separate report showed that U.S. consumer price inflation fell 0.4% last month, in line with expectations and after a 0.3% decline in November.
Core CPI, which excludes food and energy, was flat in December, compared to expectations for a 0.1% rise, after a 0.1% uptick the previous month.
Muted inflation may prompt the Federal Reserve to delay any increases in interest rates to late-2015 from mid-2015.
Also Friday, data showed that U.S. industrial production slipped 0.1% in December, confounding expectations for a 0.1% rise, after an increase of 1.3% in November.
The Aussie was also boosted by the release of strong domestic employment data on Thursday.
The Australian Bureau of Statistics said that the number of employed people increased by 37,400 last month, beating expectations for a 3,800 rise, while the unemployment rate ticked down to 6.1% from 6.2% in November. Analysts had expected the unemployment rate to sit at 6.3% last month.
Elsewhere, AUD/CHF was up 2.61% to 0.7072 late Friday, having recovered from the lows of 0.6072 struck in the previous session.
The franc still ended the week with gains of 15% against the Australian dollar after the Swiss National Bank said Thursday that it would discontinue its minimum exchange rate of 1.20 per euro, while lowering interest rates further into negative territory.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.57% to 93.05 and notched up its fifth successive week of gains, supported by weakness in the euro.
The euro remained under pressure amid mounting expectations that the European Central Bank will embark on full blown quantitative easing as soon as its next policy meeting on January 22.
AUD/USD: Aussie Fails to Find Ground, Strongest Buck in 10 Days
The greenback extended its current run against the aussie on Monday, as bulls managed to lock up almost 400 points since March 24, when the aussie reached a two-month peak against its North American counterpart at $0.7940.
The AUD/USD pair was seen 1.25% lower, to trade at $0.7649, with the $0.76 support area ahead acting as the six-year low for the cross.
The US trading session offered several updates from the macro calendar, however the AUD/USD cross lingered slightly above the intraday low at $0.7632, taking a pause after a substantial slide during the Asian and European sessions.
Traders took only minor action after pending home sales surprisingly jumped 3.1% in February, and beat expectations of a 0.4% hike, from the downwardly revised 1.2% seen previously.
Meanwhile, the Bureau of Economic Analysis released personal income and personal spending figures, both on a month-on-month basis. The first printed 0.4%, while the latter came out at 0.1%. Moreover, the PCE Price index ticked higher to 0.3%, from 0.2%, on a yearly basis.
Focus on central banks
The US dollar healed wounds last week, on dovish comments from the Federal Reserve (Fed) Chair despite the Federal Open Market Committee's latest meeting resulting in removal of ''patience'' from its vocabulary. Moreover, on Friday Fed Chair Janet Yellen held a speech in which she signaled that the US central bank should raise its interest rates sometime this year.
"Markets are interpreting Chair Yellen's statements as a win-win in a never-ending game of moving between economic expansion and Fed backstopping," Jasper Lawler from CMC Markets said.
In contrast, the Reserve Bank of Australia surprisingly cut its key rate to 2.25% in February. Meanwhile, the scope for the RBA to cut rates further has not yet been fully priced in and should the RBA decide to cut rates further, the potential to move the market is immense.
"As a result, we continue to expect the RBA to cut in May and believe that the likelihood of more cuts in the second half of the year is increasing in our view, continuing to put downside pressure on AUD," Charles St-Arnaud, economist at Nomura, commented.
Technical analysis
As the aussie booked a false breakout above the important level of resistance at $0.79, lots of people were caught and now are liquidating their long positions which is fueling the current step back and general intraday downtrend.
In a recent example of AUD/USD and its short-term outlook on intraday charts, the aussie is finding support slightly above the recent swing low of $0.7700, while a very important support lies at $0.7600.
Long-term charts are in divergence and possibly could start to form a base. The first signs of a possible bottoming pattern can be seen, although it is still very early to call it and taking any longs could be risky.
AUD/USD: Trading the Australian Trade Balance
Australian Trade Balance is closely linked to currency demand and is a key indicator. A reading which is higher than expected is bullish for the Australian dollar.
Here are all the details, and 5 possible outcomes for AUD/USD.
Published on Thursday at 00:30 GMT.
Indicator Background
Australian Trade Balance is measures the difference in the value of imported and exported goods on a monthly basis. An unexpected reading can have a significant impact on the movement of AUD/USD.
In January, the trade deficit ballooned to A$-0.98 billion, compared to A$-0.44 billion a month earlier. The estimate stood at A$-0.94 billion. The markets are expecting the downward trend to continue, with an estimate of A$-1.25 billion for the February report.
Sentiments and levels
The Aussie has struggled in 2015, and could be in for more trouble. US data is expected to improve after some weak numbers last week, and monetary divergence will continue to weigh on the Australian currency. So, the overall sentiment is bearish on AUD/USD towards this release.
Technical levels, from top to bottom: 0.7978, 0.7799, 0.7692, 0.7601, 0.7403 and 0.7283.
5 Scenarios
- Within expectations: A$-1.40 billion to A$-1.10 billion. In such a scenario, the AUD/USD is likely to rise within range, with a small chance of breaking higher.
- Above expectations: A$-1.09 billion to A$-0.95 billion: An unexpected higher reading can send the pair above one resistance line.
- Well above expectations: Above A$-0.94 billion: The chances of such a scenario are low. Such an outcome could push AUD/USD upwards, and a second resistance line might be broken as a result.
- Below expectations: A$-1.55 billion to A$-1.41 billion: A reading short of expectations could push the pair below one support level.
- Well below expectations: Below A$-1.55 billion. In this scenario, AUD/USD could break below a second support level.
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