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Currency analyst

AUD/USD outlook for October 17 -21

The pair experienced some swings this week. The USD was a main mover as the September’s FOMC minutes was in the spotlight, while the Australian domestic calendar was relatively quiet. Some changes in the AUD/USD were caused by economics data that came from China. The pair popped up to 0.7588 on Friday after the CPI for China in September beat expectations and eased some concerns about the health of the world's second-biggest economy.  Earlier this week, Aussie experienced considerable drop having posted 3-month lows at 0.7520 as the sour Chinese trade data had been released on Thursday. China is considered to be a main trade destination for Australian commodities. So, we will continue to keep an eye on Chinese data next week (there will be GDP, industrial production releases on Oct 19) that could bring some volatility to AUD/USD technical chart.

Now the quotes managed to break out a key resistance line at 0.7588 and continue their rally towards the 0.76200 mark located above the 50% Fibonacci retracement level. Hawkish tone of the Fed’s Chair J. Yellen speaking at the conference later this day may curb Aussie’s precipitous rally, though. RSI Oscillator on the 4H timeframe moved to the overbought area, so, there could be a change of the trend soon. If there is a successful test of the 0.7633 resistance line; the quotes can move further towards 0.7690 mark located near the September highs. If the US dollar gets some additional support from Yellen’s speech, the quotes may return to their key level at 0.7588 or fall even further down to the 0.7506 level (13th October low).

Next week, on Monday we will hear Philip Lowe, a head of the Australian central bank, speaking. Then, on Tuesday, we will get a change to skim through the minutes of the last Reserve Bank Board’s meeting and find out why the RBA’s senior officials decided to keep interest rate on hold. On Thursday, the market will watch employment change and unemployment rate releases that could bring some changes to the AUD/USD chart.

The US dollar may gain momentum from the CPI, Philly Fed Manufacturing Index and unemployment claims releases if they show good data. Some shockwaves to the chart can be sent on Oct 19, after the final US presidential debate comes to its end. 

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