AUD/USD Weekly Forecast: Market´s anxiety having no effects on Aussie

• Data showed economic recovery, but speculative interest doesn’t believe it could last.
• The Reserve Bank of Australia is having a monetary policy meeting next week.
• AUD/USD bearish potential still limited and with room to reach fresh yearly highs.

The AUD/USD pair is up for a second consecutive week, and it has recovered the 0.6900 threshold, although it couldn’t run beyond it. In the previous two weeks, the pair met sellers in the 0.6970 price zone. This one, the pair reached a high of 0.6951.

Same old, same old

Many things happened but currencies were unable to reflect them. Wall Street enjoyed the best quarter in decades according to Q2 close. The US employment sector continued to recover in June, with the economy adding 4.8 million jobs. US Federal Reserve’s head Powell and Treasury Secretary Mnuchin testified before Congress, and both welcomed the economic progress in the country but also pledged to keep stimulating the economy amid the persistent uncertainty related to the ongoing COVID-19 pandemic.

Encouraging headlines were overshadowed by the fact that the virus remains out of control in the US. The country has reported over 50,000 new contagions per day in the last two days, and US medical adviser, Dr. Fauci, remarked that the virus has never been under control and that the US is heading towards having 100K new cases a day.

And while the focus is on the US, the situation is no better in Australia. In comparison, however, the country is doing great, but from an average of 20 cases per day a couple of weeks ago, the country has just reported over 80 contagions these last few days. Hopes of an economic comeback continue to dilute, but the market has not yet turned into panic and rather stands in a wait-and-see position.

Economic recovery continued

According to data released these days, the economic recovery continued, yet the question is whether this recovery would last, the main reason why figures failed to trigger some relevant movements across the FX board.

Australian PMIs beat expectations, recovering in June to expansion levels. The only exception was the AIG Performance of Construction PMI, which recovered from 24.9 to 35.5 in June, indicating contraction persists in the sector. Retail Sales in the country surged by 16.9% in May, slightly better than the preliminary estimate of 16.3%. The country’s trade surplus was $8.02 billion, missing the market’s expectations but still at record levels.

The same goes for China, as the official PMIs as well as those calculated by Caixin were above 50 and generally upbeat in June, indicating that the economic comeback in the country continues.

Beyond employment data, the US released the official ISM Manufacturing PMI for June, which jumped to 52.6 from 43.1 in May, while Factory Orders in the same month grew 8.0%, more signs of improving economic conditions.

Next week, the RBA will have a monetary policy meeting. The central bank is largely anticipated to maintain its monetary policy on hold, as Governor Lowe has mentioned that, while the local economy is doing better than originally feared, it would need support for quite some time, as the country is going through a historical decline due to the pandemic.

Throughout the week, the country will publish the June AIG Performance of Services Index, TD Securities Inflation estimates for June, and May Home Loans. China will unveil June inflation next Thursday.

In the US, the focus will be on the ISM Non-Manufacturing PMI, foreseen at 48.9 in June from 45.4 in the previous month. The country will also publish as usual weekly unemployment claims data, but no other relevant figure.

AUD/USD Technical Outlook

For a third consecutive week, the AUD/USD pair remained confined to familiar levels, not far from the year high posted in June at 0.7063. The weekly chart shows that the pair continues to seesaw around a marginally bearish 100 SMA, while the 20 SMA keeps advancing slowly below the current level. The Momentum indicator corrects overbought readings while the RSI consolidates around 60, all of which indicate that the bears are nowhere to be found.

The daily chart offers a neutral stance, as the pair is trading a handful of pips above a flat 20 DMA, while the larger moving averages are also directionless, but far below the current level. The Momentum indicator remains lifeless around its midline, while the RSI grinds higher around 61, skewing the risk to the upside without confirming it.

Demand for the greenback remains limited despite the sour sentiment, and the situation will likely continue next week. The main resistance is still the 0.7000 threshold, with a break above it exposing the mentioned yearly high at 0.7063, en route to 0.7100. The first support is 0.6840, followed by a more relevant one at 0.6770. It seems unlikely that the dollar could attract enough buying interest to push the pair below this last.

AUD/USD sentiment poll

The FXStreet Forecast Poll shows that at least 50% of the polled experts are seeing the pair bearish in the upcoming weeks although the pair is seen on average, holding above a relevant support level at 0.6770. In the quarterly perspective, however, 53% vote are seeing AUD/USD hovering around the current levels.

The Overview chart, however, indicates a bullish persistent trend, as the moving averages in all the time-frame under study head firmly higher. In the weekly view, most targets accumulate above the current level, although in the monthly view, that accumulation takes place just below 0.6900. In general, the poll is reflecting the ongoing uncertainty, but also Aussie’s possible better performance against the greenback.

Related Forecasts:

EUR/USD Weekly Forecast: The song remains the same

GBP/USD Weekly Forecast: Seeing dead cat bounces everywhere, time for another fall