AUD/USD: outlook for July 11-17
The past week wasn’t bright for Australia. The Reserve Bank of Australia left the cash interest rate unchanged at 1.75%, but the market is seeing a 60% chance of a rate cut at the next meeting in August. The recent economic data from Australia were disappointing: building approvals, trade balance and retail sales came out worse than expected. In addition, the results of Australian parliamentary elections brought uncertainty, and S&P cut the nation’s sovereign outlook to negative from stable.
Another negative factor for Australian dollar is that the overall market risk sentiment looks fragile. Traders still have serious concerns about the state of global economy. The market players will closely watch Chinese statistics next week: inflation figures will be released ahead of the trading week and followed by trade balance on Wednesday and GDP and industrial production on Friday. Reduction in China’s exports/import and economic growth will be painful for riskier assets like Aussie, while better data, on the contrary, will hold the bears. In Australia itself watch labor market figures on Thursday.
Better-than-expected US nonfarm payrolls for June improved the market’s risk sentiment and allowed Australian dollar to gain versus the US currency. Note, however, that there’s resistance in the 0.7595/0.7600 area – this is the resistance line connecting April and June highs. Further resistance will be at 0.7700. Support is at 0.7440, 0.7385 and 0.7300.