AUD/USD Weekly Forecast: In desperate need of a bullish catalyst
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UNLOCK OFFER- Australia is officially out of recession and has controlled the latest coronavirus outbreak.
- Tepid US data and fundamental woes dragged the greenback lower this week.
- AUD/USD has a limited bullish momentum but can still reach 0.7500.
The AUD/USD pair has extended its 2020 rally to 0.7449 this week, ending it a handful of pips below it. The Australian dollar has been steadily but painfully advancing against its American rival, and the main reason behind it seems to be the tepid tone of equities.
Good news, little action
Good news flooded Australia this week, as the country is officially out of recession, as the Q3 Gross Domestic Product surged by 3.3% QoQ, beating expectations. Even further, the country seems to have coronavirus under control while the US reaches grim record contagions and deaths. Victoria has gone over a month without new contagions, while there were no new cases reported in South Australia. The country has reported less than 20 cases per day in the last two weeks. Restrictions are slowly being lifted, and the economy is moving into normal.
Gold prices advanced for four consecutive days, another positive factor for the aussie. Still, the advance of the pair has been quite shy when adding the broad dollar’s sell-off to the equation.
The greenback suffered equally from the market’s optimism and pessimism, with soft US data, stimulus chatter and tensions between Beijing and Washington all on the table. The US government continues with the economy mostly opening, yet macroeconomic figures in the US fell short of impressive.
Data support a steeper advance
The official ISM Manufacturing PMI came in at 57.5 while the Services PMI printed at 55.9, both contracting from October levels. Worse, the country added just 245K new jobs in November, according to the Nonfarm Payrolls report. That means the US has recovered roughly 55% of the jobs lost between March and April.
In Australia, the RBA had a monetary policy meeting, and, as widely anticipated, left its cash target rate unchanged at 0.1%. The Board also left the government bond purchasing program unchanged and repeated that it expects the recovery to be uneven, despite that the economic comeback has been better than expected.
TD Securities Inflation improved from 1.1% YoY to 1.4% in November, while the monthly reading printed at 0.3%. Company Gross Operating Profits rose by 3.2% in Q3, missing expectations of 4.5%
The US has quite a light calendar next week, as the country will publish the December Michigan Consumer Sentiment Index´s preliminary estimate and the final readings of its November inflation figures. Australia will offer at the beginning of the week the AIG Performance of Services Index and December Consumer Inflation Expectations on Thursday.
China will release its November Trade Balance and inflation data for the same month. Tensions between Beijing and Canberra will also be under scrutiny.
AUD/USD technical outlook
The AUD/USD pair weekly chart shows that it has kept advancing beyond its 200 SMA, while the 20 SMA is about to cross above it. The Momentum indicator, however, remains lifeless within neutral levels, while the RSI heads north around 63. The pair is bullish but lacks momentum and is in desperate need of a catalyst.
Daily basis, the pair continued developing above bullish moving averages, indicating no imminent risk of a bearish movement. The Momentum indicator has retreated towards its midline while the RSI consolidates near overbought levels.
Given that the pair has had a hard time advancing, sudden dollar’s strength may trigger a corrective decline. Also, profit-taking may hit the pair if it reaches the 0.7500 figure. In the meantime, 0.7410 is the immediate support level, followed by 0.7370 and 0.7300. Resistances are at 0.7500 and 0.7580.
AUD/USD sentiment poll
According to the FXStreet Forecast Poll, the pair is poised to advance next week, as 67% of the polled experts are betting for an upward extension. However, sentiment turns bearish in the monthly and quarterly perspectives, with bears down to less than 30% in both cases. In the one-month view, the pair is seen at 0.7273 on average, an irrelevant decline considering the latest advance.
In the Overview chart, moving averages maintain their bullish slopes, gaining strength upwards, somehow contradicting sentiment. As it been happening lately, the chart shows that chances of a slide sub-0.7000 are pretty much null, while higher targets in the 0.76/0.78 price zone are more likely.
Related Forecasts:
EUR/USD Weekly Forecast: Can the ECB trigger a U-turn?
GBP/USD Weekly Forecast: Volatility set to blow up with Brexit news, vaccine, technicals point up
- Australia is officially out of recession and has controlled the latest coronavirus outbreak.
- Tepid US data and fundamental woes dragged the greenback lower this week.
- AUD/USD has a limited bullish momentum but can still reach 0.7500.
The AUD/USD pair has extended its 2020 rally to 0.7449 this week, ending it a handful of pips below it. The Australian dollar has been steadily but painfully advancing against its American rival, and the main reason behind it seems to be the tepid tone of equities.
Good news, little action
Good news flooded Australia this week, as the country is officially out of recession, as the Q3 Gross Domestic Product surged by 3.3% QoQ, beating expectations. Even further, the country seems to have coronavirus under control while the US reaches grim record contagions and deaths. Victoria has gone over a month without new contagions, while there were no new cases reported in South Australia. The country has reported less than 20 cases per day in the last two weeks. Restrictions are slowly being lifted, and the economy is moving into normal.
Gold prices advanced for four consecutive days, another positive factor for the aussie. Still, the advance of the pair has been quite shy when adding the broad dollar’s sell-off to the equation.
The greenback suffered equally from the market’s optimism and pessimism, with soft US data, stimulus chatter and tensions between Beijing and Washington all on the table. The US government continues with the economy mostly opening, yet macroeconomic figures in the US fell short of impressive.
Data support a steeper advance
The official ISM Manufacturing PMI came in at 57.5 while the Services PMI printed at 55.9, both contracting from October levels. Worse, the country added just 245K new jobs in November, according to the Nonfarm Payrolls report. That means the US has recovered roughly 55% of the jobs lost between March and April.
In Australia, the RBA had a monetary policy meeting, and, as widely anticipated, left its cash target rate unchanged at 0.1%. The Board also left the government bond purchasing program unchanged and repeated that it expects the recovery to be uneven, despite that the economic comeback has been better than expected.
TD Securities Inflation improved from 1.1% YoY to 1.4% in November, while the monthly reading printed at 0.3%. Company Gross Operating Profits rose by 3.2% in Q3, missing expectations of 4.5%
The US has quite a light calendar next week, as the country will publish the December Michigan Consumer Sentiment Index´s preliminary estimate and the final readings of its November inflation figures. Australia will offer at the beginning of the week the AIG Performance of Services Index and December Consumer Inflation Expectations on Thursday.
China will release its November Trade Balance and inflation data for the same month. Tensions between Beijing and Canberra will also be under scrutiny.
AUD/USD technical outlook
The AUD/USD pair weekly chart shows that it has kept advancing beyond its 200 SMA, while the 20 SMA is about to cross above it. The Momentum indicator, however, remains lifeless within neutral levels, while the RSI heads north around 63. The pair is bullish but lacks momentum and is in desperate need of a catalyst.
Daily basis, the pair continued developing above bullish moving averages, indicating no imminent risk of a bearish movement. The Momentum indicator has retreated towards its midline while the RSI consolidates near overbought levels.
Given that the pair has had a hard time advancing, sudden dollar’s strength may trigger a corrective decline. Also, profit-taking may hit the pair if it reaches the 0.7500 figure. In the meantime, 0.7410 is the immediate support level, followed by 0.7370 and 0.7300. Resistances are at 0.7500 and 0.7580.
AUD/USD sentiment poll
According to the FXStreet Forecast Poll, the pair is poised to advance next week, as 67% of the polled experts are betting for an upward extension. However, sentiment turns bearish in the monthly and quarterly perspectives, with bears down to less than 30% in both cases. In the one-month view, the pair is seen at 0.7273 on average, an irrelevant decline considering the latest advance.
In the Overview chart, moving averages maintain their bullish slopes, gaining strength upwards, somehow contradicting sentiment. As it been happening lately, the chart shows that chances of a slide sub-0.7000 are pretty much null, while higher targets in the 0.76/0.78 price zone are more likely.
Related Forecasts:
EUR/USD Weekly Forecast: Can the ECB trigger a U-turn?
GBP/USD Weekly Forecast: Volatility set to blow up with Brexit news, vaccine, technicals point up
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