AUDUSD Wkly Outlook

AUD/USD showed some movement in both directions during the week, but ended up almost unchanged. The pair closed just above the 1.03 line, at 1.0303. There are six events in the upcoming week. Here is an outlook of the events and an updated technical analysis for AUD/USD.

Australian numbers were mixed last week. Home Loans was a disappointment, as the indicator dropped 1.5%, its worst showing since April 2012. However, both consumer and business indicators improved, with Consumer Sentiment hitting its highest level since September 2011.

1. New Motor Vehicle Sales: Monday, 00:30. This is an important consumer indicator, as motor vehicles are high-ticket items, and strong sales points to improved consumer confidence and spending. In January, the indicator jumped 2.2%, and the markets will be hoping for another respectable reading in February.
2. RBA Monetary Policy Meeting Minutes: Tuesday, 00:30. Earlier in February, the RBA maintained its benchmark interest rate, but left open the possibility of future cuts later this year. Analysts will be interested in reviewing the minutes of the last policy meeting, looking for clues as to the central bank’s future monetary policy.
3. CB Leading Index: Tuesday, 23:00. This index is composed of seven economic indicators. The index has not looked impressive recently, posting three declines in the past four releases. The markets will be hoping that the index can cross back into positive territory in the upcoming release.
4. MI Leading Index: Tuesday, 23:30. This composite index is  considered a third-tier release, as most of the indicators in the index have been released previously. The index rose 0.6% in January, and the markets will be hoping that the index can improve on this figure.
5. Wage Price Index: Wednesday, 00:30. This index is a leading indicator of consumer inflation, and is released each quarter. The index climbed 0.7% last month, and the estimate for Q4 of 2012 stands at 0.8%.
6. RBA Governor Glenn Stevens Speaks: Thursday, 22:30. The RBA Governor is scheduled to testify  before the House of Representatives Standing Committee on Economics, in Canberra. Analysts and traders will be looking for any hints with regard to interest rate clues. This is a major release, and should be treated as a market-mover.

My preference: Short positions below 1.0345 with targets @ 1.0255 & 1.022 in extension.

Alternative scenario: Above 1.0345 look for further upside with 1.037 & 1.04 as targets.

Comment: the RSI is bearish and calls for further downside.

There is resistance at 1.0739. The is followed by 1.0605. The pair has not tested this line since September. Below, there is resistance at 1.0508. 1.0418 continues to provide strong resistance. We next encounter resistance at 1.0371. This line was briefly breached as the Aussie gained some ground before retracting. Next, 1.0326 has reverted to a resistance role. It is a weak line, and could see activity if the Australian dollar pushes higher.

AUD/USD is receiving support at 1.0230. This is followed by 1.0174, which was last tested in early October. Next is 1.0080, which is protecting the parity level. The parity line, last tested in June, is psychologically significant and provides the next line of support. Next is 0.9917. This is followed by 0.9876, which has held firm since June of 2012. We next encounter support at 0.9785. The final support line for now is 0.9615. This line was last tested by the pair in June 2012.

AUD/USD managed to stay above the 1.03 line at week’s end, but the pair could continue to test this level and dip into 1.02 territory. The RBA left room for further interest rate cuts, which is bearish for the Australian dollar. The markets remain concerned with the health of the Australian economy, and the bumpy US recovery is another reason why investors might shy away from shy riskier assets, such as the volatile Aussie.