AUD/USD Weekly Forecast: Backed by sentiment, further gains at doubt

• Australian policymakers are hoping for an economic comeback in the last quarter of the year.
• Disappointing US data is unlikely to affect much the Fed’s decision on starting tapering.
• AUD/USD has a mildly bullish potential, but sellers are waiting at higher levels.

The Australian dollar managed to post gains against its American rival after a slow start to the week, ending it at around 0.7300. The pair started the week on the back foot, falling to as low as 0.7225, but recovered alongside with the market’s mood, to settle above the 0.7300 threshold.

Generally speaking, sentiment led the way for the greenback, appreciating throughout the first half of the week on the back or risk aversion, changing course on relief-related news. The week started with investors worried about supply chain issues weighing on growth and pushing inflation up, a situation that continues as it comes to an end. However, the American currency shed ground following news that the US Senate came to an agreement on the debt limit.

Dismal US data and a steady RBA

The greenback got under more pressure on Friday, following the release of the Nonfarm Payrolls report, which showed that the country added only 194K new jobs in September. US Federal Reserve Chair Jerome Powell has said that it would take one good employment report to convince him about tapering. This figure clearly delays action, but it hardly means the US central bank will refrain from moving toward normal.

The Reserve Bank of Australia had a monetary policy meeting on Tuesday, and as widely anticipated, the central bank left its cash rate at a record low of 0.1%. The accompanying statement showed that policymakers remain committed to maintaining highly supportive monetary conditions, why they still don’t believe the conditions for a rate rise would be met before 2024. The economic setback is likely to be temporal, as the central bank thinks that the economy will bounce back in the final quarter of the year on the back of higher vaccination rates.

Australian figures lift hopes

 Australian data released these days was quite encouraging, providing additional support to the aussie. TD Securities Inflation was up 0.3% MoM in September, while the AIG Performance of Construction Index in the same month improved to 53.3. The Commonwealth Bank Services PMI printed at 45.5 in September, better than the previous 44.9, although still in contraction territory. The AIG Performance of Services Index ticked higher to 45.7.

The US published the official ISM Services PMI, which improved to 61.9 in September, beating expectations. The ADP survey surprised with 568K, much better than the 428K expected, while weekly unemployment claims contracted to 326K in the week ended October 1.

The focus will be on US inflation figures and Retail Sales next week, with the latter foreseen down 0.2% in the month. As for Australia, the country will publish September NAB’s Business Confidence, expected at -6 from -5 in August. Additionally, the country will unveil October Westpac Consumer Confidence and Consumer Inflation Expectations for the same month. Finally, it will publish September employment data on Thursday, with the country expected to have lost 90K job positions in the month.

AUD/USD technical outlook

The AUD/USD pair trades between the 38.2%, and the 50% retracement of its latest daily decline measured between 0.7477 and 0.7169. The next Fibonacci resistance stands at 0.7360, the level to overcome to see the pair recovering further.

The weekly chart shows that it remains above directionless 100 and 200 SMAs, although below a firmly bearish 20 SMA. At the same time, technical indicators consolidate within negative levels, suggesting that long-term buyers remain side-lined.

The daily chart offers a mildly bullish stance, as the pair stands above a flat 20 SMA while the longer ones maintain their bearish slopes above the current level. Meanwhile, technical indicators lose bullish strength within positive levels, still far from suggesting an interim top.

Beyond 0.7360, the advance could extend toward 0.7410 first and the 0.7480 price zone later. Such a strong rally, however, seems unlikely. Bears will likely retake control once the pair falls below 0.7250, eyeing then a slide toward the year low at 0.7105.

AUD/USD sentiment poll

The FXStreet Forecast Poll suggest that AUD/USD could advance in the near term, as bulls are a majority in the weekly view. 46% of the polled experts bet for higher targets, although, on average, the pair is seen around 0.7320. Selling interest recedes in the monthly view and resumes in the quarterly one. However, they're just a few experts looking for targets above the 0.7500 price zone.

The Overview chart shows that the shorter moving average heads firmly higher, but that the longer ones turned lower, as the downside opened to lower targets close to the 0.7000 level. There are some few exceptions looking for an approach to the 0.78/0.7900 area in the longer term,  but so far chances are quite limited.

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