AUD/USD Weekly Forecast 30 Sep 19

In the previous AUD/USD weekly forecast, we observed a bearish week. The price action was significant as it successfully tested and closed below 0.68. Having said so, the 0.68 region is a significant sentiment and technical level. We would need to monitor closely to see if the price momentum would be strong enough to break clear of the influence.

The Reserve Bank of Australia gave signals that it would consider further policy easing if necessary to support growth. For example, a long period of low interest rates. The Australian unemployment rate was also worse than expected, reporting 5.3% instead of 5.2%.

The US President mentioned that China’s move to increase agricultural purchases would not be sufficient for an agreement and he was not rushing for a deal before the 2020 Presidential election. The US Federal Reserve Bank cut the Federal Funds Rate from 2.25% to 2% as expected and the accompanying comments were rather flat.

Technical Analysis

Looking at the AUD/USD weekly chart above, we observe a rather flat week. Dojis often suggest apprehension and uncertainty. As mentioned last week, the current price momentum appears to be insufficient for now to break free of 0.68’s influence.

If bullish momentum appears next week, the strong sentiment and technical region of 0.68 will be the first resistance followed by the middle bollinger band. 0.7 will likely be the extended target.

A return of bearish momentum will probably attempt to resume the long term bearish corridor. The lower bollinger band is likely to function as an immediate support, followed by 0.67. If the price action manages to push to this level, we may be seeing a setup for a test of the strong sentiment and technical region of 0.66.

US China Trade Dance Continues

Markets generally remain sentimental as momentum appears to continue following the developments of the US China Trade War. Positive comments were noted as US President Trump mentioned that a deal could be done “sooner than you think”.  The Chinese Foreign Minister Wang Yi also commented that “both sides have shown goodwill”. This likely injected some risk appetite into the markets.

US Personal Spending Bumps

The US Personal Spending was reported to be 0.1% instead of the expected 0.3%. While Personal Spending is similar to Retail Sales, it focuses on consumers. It is a fundamental component of the economy because as consumers spend, it translates to revenue and flows up stream as salaries, wholesales purchase, production orders and so on.  Therefore, investors usually take notice when data is not as per expected.

RBA Interest Rate Event

The Reserve Bank of Australia is due to release the latest cash rate early next week. The general sentiment is that a cut of 0.25% will be announced, bringing the interest rate to a low of  0.75%. A high interest usually generates demand while a low interest may result in the dumping of the currency for better yielding alternatives. Therefore the interest rate result usually has a significant impact, especially when it is an unexpected result.

A number of analysts are in fact predicting that there will be another cut beyond this. The outlook appears dovish.

The Week Ahead

There are many important economic events in the coming week for the AUD/USD. It is imperative that you practice proper money management so that any unexpected developments may be mitigated. In shorter time frames, price action is often sentimental in nature. This means that price action may change suddenly without warning.

There are many speeches due in the coming week.
USA FOMC Member Evans Speech
AUD RBA Gov Lowe Speech
USA FOMC Member Clarida Speech
USA FOMC Member Bullard Speech
USA FOMC Member Bowman Speech
USA FOMC Member Williams Speech
USA FOMC Member Evans Speech
USA FOMC Member Quarles Speech
USA FOMC Member Clarida Speech
AUS RBA Assist Gov Ellis Speech
USA FOMC Member Rosengren Speech
USA Fed Chair Powell Speech
USA FOMC Member George Speech
Speeches may reveal new insights to economic policies or contain a question and answer segment that at times go into unscripted topics resulting in unexpected developments and volatility.

USA Chicago PMI
Purchasing Managers’ Index is a survey of purchasing managers and is important as the sentiment of purchasing managers is a leading indicator of economic health. A healthy sentiment suggests that an economy is moving along well while a cautious sentiment may see less business activities due to prudence.

AUS Building Approvals
The construction of a building generates many economic activities. Jobs will be created for construction workers, the various sub contractors and services associated with new buildings such as power, water, furniture and so on.

AUS Cash Rate
A high interest usually generates demand while a low interest may result in the dumping of the currency for better yielding alternatives. Therefore the interest rate result usually has a significant impact, especially when it is an unexpected result.

AUS RBA Rate Statement
Interest rate related statements are given much attention by analysts and investors as it has a direct impact on the currency. Investors usually favor a currency with a higher interest rate and will analyse these statements thoroughly for insights on the interest rate policy.

USA ISM Manufacturing PMI
Purchasing Managers’ Index is a survey of purchasing managers and is important as the sentiment of purchasing managers is a leading indicator of economic health. A healthy sentiment suggests that an economy is moving along well while a cautious sentiment may see less business activities due to prudence.

USA ADP Non-Farm Employment Change
Employment is a fundamental component of the economy as it leads to consumer spending and hence retail sales. A low unemployment rate is an indicator of a healthy functioning economy.
ADP’s statistics is based on the payroll data of approximately 400,000 U.S. business clients. Therefore it is viewed by many as a possible early indication of the US Non-Farm Payroll result.

USA Crude Oil Inventories
Movement of oil supply may bring insights to the level of general economic activities. For example, an increasing supply may suggest excessive production or diminishing demand. A reducing supply on the other hand may suggest an economic pick up.

AUS Trade Balance
Trade balance is a measurement on trade volume and net direction. Whether a country is net import or export is important. If more exportation is done, it is likely to be beneficial for the local currency as foreign companies usually buy with the local currency. This creates demand and adds bullish pressure.

USA ISM Non-Manufacturing PMI
Purchasing Managers’ Index is a survey of purchasing managers and is important as the sentiment of purchasing managers is a leading indicator of economic health. A healthy sentiment suggests that an economy is moving along well while a cautious sentiment may see less business activities due to prudence.

AUS Retail Sales
Retail sales is a fundamental component of the economy. As consumers spend, it translates to revenue and flows up stream as salaries, wholesales purchase, production orders and so on.

AUS RBA Financial Stability Review
Economic reviews are important and monitored by traders and analysts. The idea is to obtain insights to possible future economic polices and conditions. Volatility may increase, especially when the statements deviate from expectations.

USA Average Hourly Earnings
Consumer earnings is important due to it’s upstream impact. With more earnings comes possible increased consumer spending. This translates to revenues, leading to employment and business expansion.

USA Non-Farm Employment Change
USA Unemployment Rate
The US Non-Farm Payroll is basically data released by the U.S. Bureau of Labor Statistics on a monthly basis that represents the total number of employed US workers, excluding the following employees:
– general government employees
– private household employees
– employees of nonprofit organizations which provide assistance to individuals
– farm employees
Employment is a fundamental component of the economy as it leads to consumer spending and hence retail sales. A low unemployment rate is an indicator of a healthy functioning economy.

Following an economic calendar is vital so that your forex trading plan factors in the events. Members can log in to their dashboard for a economic calendar. The latest Major Currency Pairs, USD Index, Gold, Crude Oil and Price Action Bias Signals analysis are available too.

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