Currency Analyst since 2010

AUD/USD: forecast for May 30 - June 5

AUD/USD is hovering in the 0.7200 area (61.8% Fibonacci retracement of this year’s advance).

The recent comments from the Reserve Bank of Australia’s Governor Stevens were rather soft, implying the possibility of additional monetary easing in Australia. Fundamentally lower demand from China for iron ore, Australia’s largest export, is a negative factor for Aussie.  Also note that OPEC meeting on Thursday may hit oil prices and turn out positive for USD.

Next week Australia is due to release GDP figures on Wednesday. Also watch building approvals and current account on Tuesday and retail sales and trade balance on Thursday. There will be also a number of news from China: official and non-official manufacturing PMIs will come on Wednesday and Caixin services PMI is due on Friday. Lower Chinese figures will hurt the market’s risk sentiment and will be very negative for the Aussie.

The dynamics of AUD/USD will largely depend on the expectations of the US Federal Reserve’s interest rate policy. Here we are interested in comments of the Fed’s head Janet Yellen and US economic data, especially ISM manufacturing PMI on Wednesday and nonfarm payrolls on Friday. Higher odds of the Fed’s rate hike this summer will help USD/JPY get higher.

Resistance is at 0.7250 and 0.7330. Support is at 0.7160 and 0.7065 (74.6% Fibo). 

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