AUD/USD Forecast: bullish correction could continue next week
|- Aussie underpinned by hopes, local data points to further slides.
- AUD/USD to resume its decline before reaching the 0.7000 threshold.
The AUD/USD pair is finishing the week above the 0.6800 level for the first time in a month, after bottoming for the week at 0.6723. The pair posted most of its weekly gain Thursday, underpinned by hopes for a Brexit deal, and the Australian employment report. This last was mixed, as the country added 14.7K new jobs in September, slightly below the 15.0K expected. However, full-time jobs were up by 26.2K while part-time jobs declined by 11.4K. The unemployment rate fell to 5.2%, although the participation rate also shrunk, from 66.2% to 66.1%. The RBA’s unemployment rate target is 4.5%, and despite the down-tick is partially linked to the increase in the participation rate, it’s moving in the right direction.
Not all are roses in Australia. The NAB Business Confidence Index fell to -2 in the third quarter of the year, down from 5 in Q2, while the Westpac Leading Index printed -0.08% in September. The Reserve Bank of Australia's latest meeting Minutes showed that policymakers are willing to keep on cutting rates, but would most likely pause, amid the negative effect lower rates are having on households and savers.
Chinese Gross Domestic Product, released just this Friday, dropped to its lowest level in more than two decades, as the economy grew by 6.0% YoY in the three months to September. Indeed, trade tensions with the US are taking their toll.
The weekly advance had more to do with Brexit headlines weighing on the dollar than anything else. The upcoming days will be light in terms of macroeconomic data, as only the preliminary October Commonwealth Bank PMI will be out.
AUD/USD Technical Outlook
The AUD/USD pair is trading around 0.6850, at its highest for this month, and with the longer bullish potential limited, as in the weekly chart, technical indicators remain within negative territory, the Momentum flat and the RSI advancing just modestly. The pair is currently developing a few pips below a bearish 20 SMA, which remains far below a firmly bearish 100 SMA.
The daily chart indicates that the rally may continue, as the pair is now well above its 20 DMA, and just a few pips below the 100 DMA, while technical indicators main their strong bullish slopes well into positive ground. The mentioned 100 DMA is the immediate resistance at 0.6860 en route to the 0.6900 figure. Beyond this last, the critical 0.7000 threshold comes next. Below 0.6820, the pair could enter in a bearish phase, with 0.6730 and 0.6630 as the next relevant supports.
AUD/USD sentiment poll
The FXStreet Forecast Poll shows that the pair could near 0.6900 these days, with most polled experts bullish. But the sentiment turns negative afterward, with bears surging to 63% in the monthly view and at 55% in the three-month perspective. The pair is not seen surpassing the 0.6900 region on average.
The Overview chart indicates that beyond the short-term upward corrective movement, the pair remains under bears’ control, as most targets accumulate below the current level.
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