AUD/USD Weekly Forecast: Aussie remains resilient to the dollar’s strength
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UPGRADE- Australian upbeat employment-related data partially offset the greenback’s demand.
- Government bond yields continue to rally on recovery hopes.
- AUD/USD loses its bullish long-term potential, but bears remain side-lined.
The Australian dollar is unchanged on a weekly basis against its American rival, trading below the 0.7800 level. Upbeat Australian data could not beat higher government bond yields, which remain in the eye of the storm and the main market’s motor.
Central bankers juggling acts
The US Federal Reserve announced its monetary policy decision on Wednesday, and, as widely anticipated, policymakers left rates and quantitative easing on hold. Chief Jerome Powell remarked that “substantial progress” in macroeconomic data is needed before the central bank considers any change to its ultra-loose monetary policy. Regarding inflation, he said that he expects a transitory pickup but retreat later. The dot plot shows no rate hikes throughout 2023.
Powell poured cold water on the bond market as yields retreated following his balanced yet conservative stance, but it did not last long. Yields resumed their advances on Friday, with long-term US Treasury yields reaching levels that were last seen in January 2020.
The Reserve Bank of Australia published the Minutes of its latest meeting. The document showed that there would be no rate increases for a considerable time. On inflation, the central bank will look through “transitory fluctuations,” adding that they expect it to remain subdued for several years. Even further, Governor Lowe indicated that wages need to reach 3% for the central bank to consider tightening. Wage growth in Q4 posted 1.4%, its lowest reading on record.
Good news in Australia
As stated, Australian data was better than anticipated. The February Westpac Leading Index came in at 0.02%, improving from -0.1% in the previous month. In the same month, the country added 88.7K job positions, according to the monthly employment report. The unemployment rate contracted to 5.8%, beating the 6.3% expected, while the participation rate remained steady at 66.1%. The preliminary estimate of February Retail Sales resulted at -1.1%, worse than the 0.4% anticipated.
US macroeconomic figures, on the other hand, fell short of the market’s expectations. February Retail Sales fell by 3% in the month and 3.5% YoY, while Initial Jobless Claims for the week ended March 12 printed at 770K, much worse than the 700K expected. Building Permits and Housing Starts fell by over 10% each in February, while Industrial Production shrank by 2.2% in February.
On Wednesday, the focus will be on growth estimates. Australia will publish the March preliminary estimates of the Commonwealth Bank PMIs, expected to remain within expansion levels. Markit will release later in the day the preliminary estimates of the US PMIs, also seen holding well above 50.
The US will also publish February Durable Goods Orders, expected to have grown by 1.2% in the month. The country will publish the final version of its Q4 Gross Domestic Product on Thursday.
AUD/USD technical outlook
The AUD/USD pair keeps losing bullish potential but is still far from bearish, according to technical readings in the weekly chart. AUD/USD continues to develop above a bullish 20 SMA, which advances below the longer ones. However, technical indicators keep grinding lower, still above their midlines.
The daily chart for the pair offers a neutral-to-bearish stance. The pair is developing below a mildly bearish 20 SMA but above bullish longer ones. The Momentum indicator has turned sharply lower but holds within neutral readings, while the RSI indicator heads marginally lower around 48.
The first support level is 0.7690, followed by 0.7620. The most relevant one is 0.7563, where the pair bottomed in February. The immediate resistance level is 0.7770, but the pair would need to build up momentum above 0.7820 to have a chance at extending its advance toward the 0.7900 price zone.
AUD/USD sentiment poll
The FXStreet Forecast Poll shows that the bearish potential is well-limited. The pair is expected to fall in the near-term, as 72% of the polled experts bet for a slide. However, the average target is at 0.7665. The view is sideways in the monthly and quarterly perspectives, as most investors see the pair holding within familiar levels.
In the Overview chart, moving averages are neutral to mildly bearish, although most targets remain between 0.7600 and 0.8000, with clear accumulations above the 0.7800 threshold.
Related Forecasts:
- Australian upbeat employment-related data partially offset the greenback’s demand.
- Government bond yields continue to rally on recovery hopes.
- AUD/USD loses its bullish long-term potential, but bears remain side-lined.
The Australian dollar is unchanged on a weekly basis against its American rival, trading below the 0.7800 level. Upbeat Australian data could not beat higher government bond yields, which remain in the eye of the storm and the main market’s motor.
Central bankers juggling acts
The US Federal Reserve announced its monetary policy decision on Wednesday, and, as widely anticipated, policymakers left rates and quantitative easing on hold. Chief Jerome Powell remarked that “substantial progress” in macroeconomic data is needed before the central bank considers any change to its ultra-loose monetary policy. Regarding inflation, he said that he expects a transitory pickup but retreat later. The dot plot shows no rate hikes throughout 2023.
Powell poured cold water on the bond market as yields retreated following his balanced yet conservative stance, but it did not last long. Yields resumed their advances on Friday, with long-term US Treasury yields reaching levels that were last seen in January 2020.
The Reserve Bank of Australia published the Minutes of its latest meeting. The document showed that there would be no rate increases for a considerable time. On inflation, the central bank will look through “transitory fluctuations,” adding that they expect it to remain subdued for several years. Even further, Governor Lowe indicated that wages need to reach 3% for the central bank to consider tightening. Wage growth in Q4 posted 1.4%, its lowest reading on record.
Good news in Australia
As stated, Australian data was better than anticipated. The February Westpac Leading Index came in at 0.02%, improving from -0.1% in the previous month. In the same month, the country added 88.7K job positions, according to the monthly employment report. The unemployment rate contracted to 5.8%, beating the 6.3% expected, while the participation rate remained steady at 66.1%. The preliminary estimate of February Retail Sales resulted at -1.1%, worse than the 0.4% anticipated.
US macroeconomic figures, on the other hand, fell short of the market’s expectations. February Retail Sales fell by 3% in the month and 3.5% YoY, while Initial Jobless Claims for the week ended March 12 printed at 770K, much worse than the 700K expected. Building Permits and Housing Starts fell by over 10% each in February, while Industrial Production shrank by 2.2% in February.
On Wednesday, the focus will be on growth estimates. Australia will publish the March preliminary estimates of the Commonwealth Bank PMIs, expected to remain within expansion levels. Markit will release later in the day the preliminary estimates of the US PMIs, also seen holding well above 50.
The US will also publish February Durable Goods Orders, expected to have grown by 1.2% in the month. The country will publish the final version of its Q4 Gross Domestic Product on Thursday.
AUD/USD technical outlook
The AUD/USD pair keeps losing bullish potential but is still far from bearish, according to technical readings in the weekly chart. AUD/USD continues to develop above a bullish 20 SMA, which advances below the longer ones. However, technical indicators keep grinding lower, still above their midlines.
The daily chart for the pair offers a neutral-to-bearish stance. The pair is developing below a mildly bearish 20 SMA but above bullish longer ones. The Momentum indicator has turned sharply lower but holds within neutral readings, while the RSI indicator heads marginally lower around 48.
The first support level is 0.7690, followed by 0.7620. The most relevant one is 0.7563, where the pair bottomed in February. The immediate resistance level is 0.7770, but the pair would need to build up momentum above 0.7820 to have a chance at extending its advance toward the 0.7900 price zone.
AUD/USD sentiment poll
The FXStreet Forecast Poll shows that the bearish potential is well-limited. The pair is expected to fall in the near-term, as 72% of the polled experts bet for a slide. However, the average target is at 0.7665. The view is sideways in the monthly and quarterly perspectives, as most investors see the pair holding within familiar levels.
In the Overview chart, moving averages are neutral to mildly bearish, although most targets remain between 0.7600 and 0.8000, with clear accumulations above the 0.7800 threshold.
Related Forecasts:
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