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Currency analyst

AUD/USD outlook for October 10-14

This week we had some data releases from Australia. Monday started with a portion of cheering news. After a sharp drop in August, the Australian PMI increased by 2.9 points to a broadly stable 49.8 points in September. On Tuesday we heard a cash rate announcement from the Reserve Bank Australia; the board decided to leave the rate unchanged at 1.5 %, taking into account the fact that inflation remains below most central bank’s targets and the nation’s economy moved off the dead center. The RBA has already eased monetary policy at the RBA’s previous meeting, so, this time, it judged that holding the stance of policy unchanged is consistent with their long-term goals and inflation target. Then, we got the retail sales and trade balance data that came in at a beat on expectations. But Aussie didn’t pay to this news too much heed.

The AUS/USD backed off the 0.77 area at the beginning of the week and then breached below 50-day MA around 0.7600. It gained bullish momentum from the bunch of US data releases (NFP, unemployment rate) that didn’t justify the market’s expectations. If the pair closes the week above this point, Aussie may once again try to retest highs. Below 0.7600 Aussie will target 0.7500/0.7480 (2016 support line).

The smooth ascending of the AUD/USD currency pair could be disturbed by news and data releases coming from the United States next week. On Wednesday everybody’s eyes will be fixed on the FOMC meeting minutes which in a way could determine the FOMC members’ votes on where to set interest rates. Then, on Tuesday we will be waiting for the US unemployment claims (one of the key releases ahead of the Fed’s meeting). In addition, tons of the US statistic data will be dropped on us on Friday. And, as if we couldn’t get enough, at the end of the day we will hear the J. Yellen’s comments on all these overwhelming data reports. We expect her speech will be rather hawkish despite the unpleasant data we got today. According to Yellen, the economy needs to create just under 100,000 jobs a month (we have even more than that – 156K) in order not to overheat the economy.

Next week there won’t be any great releases coming from Australia. On Tuesday we will know about the sentiments of Australian businesses and define whether the nation’s economy is healthy or not, once National Australia Bank releases its report on the business confidence. Then, on Friday, I encourage you not to miss the RBA’s Financial Stability review just to make sure that the bank won’t change its monetary stance in the nearest future. But all these reports shouldn’t change the technical charts significantly. 

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