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Forex - AUD/USD weekly outlook: August 15 - 19

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Forexpros - Last week saw the Australian dollar fall against its U.S. counterpart in volatile trade, as an historic downgrade of the U.S. credit rating by Standard & Poor's and escalating fears over sovereign debt contagion in the euro zone saw risk aversion strengthen.

AUD/USD hit 0.9925 on Tuesday, the lowest since March 17; the pair subsequently consolidated at 1.0351 by close of trade on Friday, shedding 0.68% over the week, its second consecutive weekly decline.

The pair was likely to find short-term support at 1.0109, Thursday's low and resistance at 1.0451, the high of August 8.

The Aussie came under pressure on Monday, as market sentiment was rattled after ratings agency Standard and Poor's downgraded the U.S. sovereign debt rating by one notch to AA+ from AAA after markets closed last Friday.

The ratings agency kept the rating outlook at negative, suggesting a further downgrade could be possible within the next 12 to 18 months.

The downgrade prompted investors to shun riskier assets, such as stocks and high yielding currencies, and flock to traditional safe haven assets like the yen, Swiss franc and gold.

The Aussie extended losses on Tuesday, falling to a five-month low after stronger-than-expected Chinese inflation data added to fears over the outlook for global economic growth.

But the Australian dollar rebounded after the Federal Reserve pledged to keep its benchmark interest rate at an all-time low until "at least through mid-2013."

The Fed also indicated that it "discussed the range of policy tools available to promote a strong economic outlook recovery in a context of price stability" and said it was prepared to employ the tools "as appropriate".

Meanwhile, official data showed Thursday that Australia's unemployment rate rose to an eight month high of 5.1% in July, up from 4.9% in the previous month.

The report also showed that Australia's employment change fell by a seasonally adjusted 0.1K in July, confounding expectations for a gain of 10.3K.

On Friday, government data showed that U.S. retail sales rose 0.5% in July, the biggest gain in four months.

However, concerns over the U.S. economic outlook remained after the University of Michigan's preliminary index of consumer sentiment plunged to a three-decade low in August.

Looking ahead to the coming week, U.S. data on consumer price inflation will be a major focus of attention, while the Reserve Bank of Australia is to publish the minutes of its most recent monetary policy committee meeting.

Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets. The guide skips Friday, as there are no relevant events on this day

Monday, August 15

Australia is to produce official data on new vehicle sales, an important indicator of consumer confidence.

Meanwhile, the U.S. is to produce official data on manufacturing activity in New York State and a report on the balance of domestic and foreign investment in the U.S.

Tuesday, August 16

The Reserve Bank of Australia is to release the minutes of the most recent policy-setting meeting. The minutes give an in-depth insight into the decision on where to set interest rates.

Later in the day, the U.S. is to publish official data on building permits, an excellent gage of future construction activity, as well as data on housing starts. The U.S. is also to release data on import prices, the capacity utilization rate and industrial production, a leading indicator of economic health.

Wednesday, August 17

Australia is to publish official data on wage costs as well as a report on a leading index designed to predict the future direction of the economy.

Meanwhile, the U.S. is to publish official data on producer price inflation, a leading indicator of consumer inflation, as well as government data on crude oil stockpiles.

Thursday, August 18

The U.S. is to publish a flurry of economic data with government reports on initial jobless claims, consumer price inflation, existing home sales, manufacturing activity in Philadelphia as well as a report on natural gas stockpiles.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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