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AUD/USD Weekly Forecast: Risk-on support the aussie, US employment may change the picture

  • Record highs in Wall Street amid an upbeat mood underpinned the AUD.
  • Softer than anticipated Australian macroeconomic figures capped the upside.
  • AUD/USD modest recovery is not enough to grant further gains ahead.

The AUD/USD pair trades a handful of pips above the 0.7600 level, up for the week after falling to a fresh 2021 low of 0.7476 in the previous one. The pair gained ground on the heels of a generalized positive market’s mood.

Generally speaking, macroeconomic data coming from major economies indicated sustained growth, regardless if it missed or surpassed the market’s expectations. Central bankers from around the developed world are showing different degrees of optimism regarding the post-pandemic comeback, which is underway.

Markets rotate around US monetary policy

US Federal Reserve Chair Jerome Powell testified before Congress on Tuesday but had no impact on price action, as he pretty much reiterated what he declared with the FOMC statement.  

News that US Congress has agreed on a spending deal further fueled the upbeat sentiment. US President Joe Biden announced on Thursday that a bipartisan deal was reached on Biden’s infrastructure plan. The announcement lacked details but was enough to boost equities, with Wall Street ending the week near all-time highs.

 Australian data was softer than anticipated, preventing the aussie from posting substantial gains. The preliminary estimate of May Retail Sales printed at 0.1%, down from 1.1% final in April. The June flash Commonwealth Bank PMIs held within expansion territory but contracted from a month earlier.

In the US, macroeconomic figures also missed expectations but were far from concerning. Durable Goods Orders were up 2.3% in May, while the preliminary Markit PMIs resulted above 60 in June, according to preliminary estimates. Initial Jobless Claims for the week ended June 18, printed at 411K. Finally, the Core Personal Consumption Expenditures Price Index jumped to 3.4% YoY as expected in May.

What’s next in the docket

Next week will bring some first-tier figures, with the focus on US employment data. The ADP survey on private jobs’ creation will be out on Wednesday and is foreseen at 450K for June, below the previous 978K. On Thursday, the country will release weekly unemployment claims ahead of the June Nonfarm Payrolls report to be out on Friday. At the time being, market expectations point to a 600K increase in the headline number, while the unemployment rate is foreseen contracting from 5.8% to 5.7%. In between, the US will publish the official ISM Manufacturing PMI.

Australia is having a quiet week, as it will only unveil the June AIG Performance of Manufacturing Index and the May Trade Balance. Chinese data may spur some action, as the country will release the official NBS June PMIs on Wednesday.

AUD/USD technical outlook

The AUD/USD pair has recovered half the ground lost in the previous week, although further gains are still unclear. In the weekly chart, the pair is developing below a flat 20 SMA, which stands at around 0.7710, while the longer moving averages also lack directional strength but far below the current level. Technical indicators have turned modestly higher but remain within negative levels.

On a daily basis, the pair has managed to recover above a flat 200 SMA but remains below the shorter ones, and with the 20 SMA maintaining its bearish slope. Technical indicators corrected oversold conditions from the previous week´s sell-off but remain within negative levels, without strength enough to support continued recovery.

From the current level, supports come in at 0.7530 and 0.7460, followed by the 0.7390 price zone. The immediate resistance level is 0.7620, with a break above it favoring an extension towards the 0.7700 region.

AUD/USD sentiment poll

According to the FXStreet Forecast Poll, the AUD/USD pair may extend its decline in the near-term, but seems poised to recover afterwards. In the weekly view, only 17% of the polled experts are betting for an advance. The pair is seen on average at 0.7543. In the monthly and quarterly perspectives bulls represent roughly 60% of the polled experts, although on average, the pair is seen holding below the 0.7700 figure.

In the Overview chart, the near-term moving average has recovered, but the longer ones remain flat, suggesting limited buying interest. As it has been happening lately, the number of possible targets sub-0.7600 continued to increase. 

Author

Valeria Bednarik

Valeria Bednarik was born and lives in Buenos Aires, Argentina. Her passion for math and numbers pushed her into studying economics in her younger years.

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