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Forex - AUD/USD weekly outlook: March 11 - 15

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Investing.com - The Australian dollar ended Friday's session at a three-day low against its U.S. counterpart, after stronger-than-forecast U.S. nonfarm payrolls data bolstered demand for the greenback.

AUD/USD hit 1.0210 on Friday, the pair's lowest since March 5; the pair subsequently consolidated at 1.0234 by close of trade, up 0.32% for the week.

The pair is likely to find support at 1.0186, the low from March 5 and resistance at 1.0288, the high from March 7.

The Department of Labor said the U.S. economy added 236,000 jobs last month, blowing past expectations for an increase of 160,000. The unemployment rate ticked down to 7.7%, the lowest level since December 2008, from 7.9% in January.

The robust data added to speculation over an earlier-than-expected end to the Federal Reserve's easing program, bolstering demand for the dollar.

Meanwhile, in China, a report Friday showed that the nation's trade surplus narrowed less-than-expected in February from January, as exports jumped 21.8%, while imports tumbled 15.2%.

China's trade surplus hit USD15.3 billion last month, down from a USD29.2 billion surplus reported in January. Analysts were expecting an USD8.8 billion deficit.

Official data released over the weekend showed that consumer prices in China rose 3.2% in February from a year earlier, above expectations for a 3% increase and accelerating sharply from a 2% rate of increase in January.

The faster-than-expected increase in the rate of inflation was likely to dampen hopes that Beijing will introduce fresh easing measures in the near-term to boost economic growth.

Separate reports showed that industrial production rose 9.9% in February, less than the expected 10.5% increase and following a 10.3% rise the previous month.

China is Australia's largest export destination.

The Aussie was well-supported earlier in the week after official data showed that Australia's economy expanded 0.6% in the fourth quarter, in line with expectations. The rate of expansion of the third quarter GDP was revised up to 0.7% from 0.5%.

Also last week, the Reserve Bank of Australia held its benchmark interest rate at a 50-year low of 3%, saying that the bank's current monetary policy is appropriate.

The announcement came after official data showed that retail sales in Australia rose 0.9% in January, more than the expected 0.4% increase, after a 0.4% decline the previous month.

A separate report showed that Australia's current account deficit narrowed to AUD14.7 billion in the fourth quarter, from a deficit of AUD15 billion in the previous quarter.

Elsewhere, the Aussie was higher against the euro on Friday, with EUR/AUD dipping 0.54% to hit 1.2699.

The euro came under pressure after ratings agency Fitch Ratings cut Italy's sovereign credit rating to BBB+ from A-, citing the inconclusive outcome of last month's parliamentary elections and a deeper recession.

The euro rallied broadly on Thursday after less dovish than expected comments from European Central Bank President Mario Draghi at the bank's post-policy meeting press conference.

Draghi said monetary policy will remain firmly accommodative and added that confidence was returning to financial markets.

In the week ahead, investors will be closely watching U.S. data on retail sales, industrial production and inflation to determine the strength of the economic recovery.

Markets will also be eyeing developments in the euro zone as well as the release of key Australian employment data.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Monday as there are no relevant events for that date.

Tuesday, March 12

Australia is to publish a report on business confidence, an important indicator of economic health.

Later in the day, the U.S. is to publish data on the federal budget balance.

Wednesday, March 13

Australia is to release a report on consumer sentiment, a leading indicator of consumer spending, as well as official data on home loans.

The U.S. is to release government data on retail sales, as well as official data on import prices, business inventories and crude oil stockpiles.

Thursday, March 14

Australia is to release government data on the change in the number of people employed and the unemployment rate, a leading economic indicator.

Meanwhile, the U.S. is to release government data on producer price inflation, the leading indicator of consumer inflation and the weekly government report on initial jobless claims.

Friday, March 15

The U.S. is to round up the week with official data on consumer inflation and preliminary data from the University of Michigan on consumer sentiment. The U.S. is also to release data on industrial production, the capacity utilization rate and manufacturing activity in New York state.

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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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