AUD/USD Weekly Forecast: Covid-19 under control, but path to economic comeback seems painful
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UNLOCK OFFER- Australia has got the pandemic under control after 14 straight days without new cases in Victoria.
- Employment data and Retail Sales to provide clues on Australian economic health.
- AUD/USD is holding on to the higher ground but lacks directional momentum.
The AUD/USD pair is stuck at 0.7250, ending the week pretty much as it started. It was a dull week. which seems to have remained aside from market developments. The aussie peaked at 0.7339 and held above the 0.7200 figure.
The pair tends to follow equities movements, meaning it trades on sentiment. The weekly high was set on Monday when news about progress in the Pfizer coronavirus vaccine sent equities skyrocketing. However, the same news backed the demand for the greenback, preventing AUD/USD from appreciating further.
COVID-19 controlled in Australia
The encouraging news was quickly overshadowed by the spread speed of COVID-19 in Europe and the US. The world is reporting roughly 600K new cases per day, while on November 12, the global death toll reached a record of 9,659. Over 10% of such deaths took place in the US, while Europeans account for roughly 40% of the total.
The Australian situation is much better, as the Victoria area recorded 14 straight days without new contagions or deaths. This past week, the country reported, on average, 10 new cases per day. The country has the pandemic under control, but also at the price of a tough lockdown, with restrictions being lifted at baby steps.
US political turmoil had a limited effect on the pair, as investors shift the focus away from the presidential election. At the time being, Democrat Joe Biden seems poised to be the 46th US President, although a clearer picture will come early December when states will start providing official results.
Tepid macroeconomic picture
It was quite a dull week for the AUD/USD pair, exacerbated by the absence of relevant Australian macroeconomic data. The country published the NAB’s Business Confidence, which improved in October to 5 from -4 in the previous month, and the November Westpac Consumer Confidence that contracted to 2.5% from 11.9%, missing the market’s expectations. On a positive note, Consumer Inflation Expectations improved to 3.5% in November, beating the 3.2% forecast.
Nevertheless, it’s worth noting that the Reserve Bank of Australia slashed rates to record lows earlier this month and is ready to provide whatever support the economy needs.
The next week will start with RBA’s Governor Phillip Lowe giving a speech and China publishing October Retail Sales and Industrial Production. The RBA will publish the Minutes of its latest meeting on Tuesday when the US will release its most relevant report of the week, October Retail Sales.
Australian employment data will take center stage later in the week, as the country will publish Q3 wage growth on Wednesday and the monthly employment report on Thursday to finally unveil the preliminary estimate for October Retail Sales on Friday.
AUD/USD technical outlook
The AUD/USD pair made little progress in the last few days. The weekly chart shows that it continued hovering around its 200 SMA while developing above the shorter ones. The 20 SMA maintains its bullish slope, somehow limiting the downside around 0.7150. In the meantime, technical indicators have turned flat, with the Momentum in neutral levels and the RSI around 56.
The daily chart provides a neutral-to-bullish bias, as the pair remains above all of its moving averages, although the 20 DMA and the 100 DMA continue to converge, currently around 0.7150. Technical indicators are making a shy attempt of recovering ground within positive levels, but lacking strength enough to confirm so.
The first support level is 0.7200, followed by the 0.7120 price zone. A break below this last would expose the critical 0.700 threshold. On the other hand, 0.7340 provides resistance, en route to the yearly high at 0.7411.
AUD/USD sentiment poll
The FXStreet Forecast Poll indicates that speculative interest is still unable to make up its mind on where the pair is going as sentiment flips between bullish and bearish throughout the three time-frame under study, although the average targets remain between 0.71 and 0.73.
What remains clear in the Overview chart, is that chances of a steeper decline are well-contained, as just a few participants believe the pair could lose the 0.7000 threshold. The moving averages remain flat, but in the quarterly perspective, most possible targets accumulate around or above the current level.
Related Forecasts:
EUR/USD Weekly Forecast: Biden knocking on White House’s doors, covid out of control
GBP/USD Weekly Forecast: Even Boris cannot break the pound's power play amid Britain's covid edge
- Australia has got the pandemic under control after 14 straight days without new cases in Victoria.
- Employment data and Retail Sales to provide clues on Australian economic health.
- AUD/USD is holding on to the higher ground but lacks directional momentum.
The AUD/USD pair is stuck at 0.7250, ending the week pretty much as it started. It was a dull week. which seems to have remained aside from market developments. The aussie peaked at 0.7339 and held above the 0.7200 figure.
The pair tends to follow equities movements, meaning it trades on sentiment. The weekly high was set on Monday when news about progress in the Pfizer coronavirus vaccine sent equities skyrocketing. However, the same news backed the demand for the greenback, preventing AUD/USD from appreciating further.
COVID-19 controlled in Australia
The encouraging news was quickly overshadowed by the spread speed of COVID-19 in Europe and the US. The world is reporting roughly 600K new cases per day, while on November 12, the global death toll reached a record of 9,659. Over 10% of such deaths took place in the US, while Europeans account for roughly 40% of the total.
The Australian situation is much better, as the Victoria area recorded 14 straight days without new contagions or deaths. This past week, the country reported, on average, 10 new cases per day. The country has the pandemic under control, but also at the price of a tough lockdown, with restrictions being lifted at baby steps.
US political turmoil had a limited effect on the pair, as investors shift the focus away from the presidential election. At the time being, Democrat Joe Biden seems poised to be the 46th US President, although a clearer picture will come early December when states will start providing official results.
Tepid macroeconomic picture
It was quite a dull week for the AUD/USD pair, exacerbated by the absence of relevant Australian macroeconomic data. The country published the NAB’s Business Confidence, which improved in October to 5 from -4 in the previous month, and the November Westpac Consumer Confidence that contracted to 2.5% from 11.9%, missing the market’s expectations. On a positive note, Consumer Inflation Expectations improved to 3.5% in November, beating the 3.2% forecast.
Nevertheless, it’s worth noting that the Reserve Bank of Australia slashed rates to record lows earlier this month and is ready to provide whatever support the economy needs.
The next week will start with RBA’s Governor Phillip Lowe giving a speech and China publishing October Retail Sales and Industrial Production. The RBA will publish the Minutes of its latest meeting on Tuesday when the US will release its most relevant report of the week, October Retail Sales.
Australian employment data will take center stage later in the week, as the country will publish Q3 wage growth on Wednesday and the monthly employment report on Thursday to finally unveil the preliminary estimate for October Retail Sales on Friday.
AUD/USD technical outlook
The AUD/USD pair made little progress in the last few days. The weekly chart shows that it continued hovering around its 200 SMA while developing above the shorter ones. The 20 SMA maintains its bullish slope, somehow limiting the downside around 0.7150. In the meantime, technical indicators have turned flat, with the Momentum in neutral levels and the RSI around 56.
The daily chart provides a neutral-to-bullish bias, as the pair remains above all of its moving averages, although the 20 DMA and the 100 DMA continue to converge, currently around 0.7150. Technical indicators are making a shy attempt of recovering ground within positive levels, but lacking strength enough to confirm so.
The first support level is 0.7200, followed by the 0.7120 price zone. A break below this last would expose the critical 0.700 threshold. On the other hand, 0.7340 provides resistance, en route to the yearly high at 0.7411.
AUD/USD sentiment poll
The FXStreet Forecast Poll indicates that speculative interest is still unable to make up its mind on where the pair is going as sentiment flips between bullish and bearish throughout the three time-frame under study, although the average targets remain between 0.71 and 0.73.
What remains clear in the Overview chart, is that chances of a steeper decline are well-contained, as just a few participants believe the pair could lose the 0.7000 threshold. The moving averages remain flat, but in the quarterly perspective, most possible targets accumulate around or above the current level.
Related Forecasts:
EUR/USD Weekly Forecast: Biden knocking on White House’s doors, covid out of control
GBP/USD Weekly Forecast: Even Boris cannot break the pound's power play amid Britain's covid edge
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