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Forex - AUD/USD weekly outlook: March 18 - 22

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Shutterstock photo - The Australian dollar ended Friday's session at a five-week high against its U.S. counterpart, as indications the Federal Reserve will keep its asset-purchase program in place for the indefinite future weighed on the greenback.

AUD/USD hit 1.0412 on Friday, the pair's highest since February 5; the pair subsequently consolidated at 1.0405 by close of trade, up 1.64% for the week.

The pair is likely to find support at 1.0286, the low from March 14 and resistance at 1.0456, the high from February 5.

The Labor Department reported that U.S. consumer price inflation rose 0.7% in February, bringing the annualized rate of consumer inflation to 2.0%.

Core consumer prices, which exclude volatile food and energy costs, also rose 2% year-on-year.

In December, the U.S. central bank said an "exceptionally low" target interest rate is appropriate as long as inflation isn't forecast to rise to more than 2.5%.

Sentiment on the dollar was also hit after data showed that the University of Michigan's consumer sentiment index dropped to 71.8 in March, the lowest level since December 2011, from a final reading of 77.6 in February.

The disappointing data sparked profit taking ahead of an upcoming Federal Reserve policy meeting after a recent string of strong U.S. economic data reinforced optimism over the country's economic recovery and saw the dollar strengthen across the board.

The Aussie rallied sharply on Thursday after official data showed that the Australian economy added 71,500 jobs in February, exceeding expectations for a 9,000 rise, after an increase of 13,000 jobs the previous month.

The report also showed that the unemployment rate in Australia remained unchanged at 5.4% last month, compared to expectations for a rise to 5.5%.

Elsewhere, the Aussie was lower against the euro on Friday, with EUR/AUD adding 0.28% to hit 1.2559.

Sentiment on the euro remained fragile amid ongoing concerns over the economic outlook for the euro zone and political uncertainty in Italy.

In the week ahead investors will be focusing on Wednesday's Federal Reserve policy statement, amid speculation over an earlier-than-expected end to the bank's asset purchase program.

Fed Chairman Ben Bernanke is to give a press conference after the release of the policy statement.

Markets will also be eyeing the release of the minutes from the Reserve Bank of Australia's most recent policy-setting meeting.

Ahead of the coming week, has compiled a list of these and other significant events likely to affect the markets.

Monday, March 18

Australia is to release official data on new vehicle sales, a leading indicator of consumer confidence.

Tuesday, March 19

The Reserve Bank of Australia is to publish the minutes of its most recent policy meeting. The minutes give investors a valuable insight into economic conditions from the bank's perspective.

Later Tuesday, the U.S. is to release official data on building permits, a leading indicator of future construction activity, and data on housing starts.

Wednesday, March 20

In the U.S., the Federal Reserve is to announce the federal funds rate and release its rate statement and quarterly economic projections. The announcement is to be followed by a press conference with Fed Chairman Ben Bernanke to discuss monetary policy and the economic outlook.

Thursday, March 21

The U.S. is to release the weekly government report on initial jobless claims, as well as industry data on existing home sales and official data on manufacturing activity in Philadelphia.

Friday, March 22

Australia is to publish an index of leading economic indicators, designed to predict the future direction of the economy. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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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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