USD/CAD Weekly Technical Forecast (SEP 13-17 2010)

The Canadian dollar had a busy and positive week, and will now have a lighter one – a week in which technicals will have more impact. Here’s an outlook for the Canadian events and an updated technical analysis for USD/CAD, now at lower ground.

USD/CAD daily chart with support and resistance lines marked. Click to enlarge:



The third rate hike in Canada wasn’t fully priced, and the release boosted the Canadian dollar. Employment data was also better than predicted and helped push USD/CAD lower. This week, quarterly figures will provide a long term view.

1. Labor Productivity: Published on Tuesday 12:30. This quarterly release comes rather late. Nevertheless, it’s of high importance and rocks the loonie. In Q1, productivity rose by only 0.7%, half of early expectations. This was good for the Canadian dollar, as low productivity means higher salaries – higher inflation. A similar rise in productivity is expected now – 0.9%.


2. Capacity Utilization Rate: Published on Tuesday, 12:30. Utilizing more of the available resources means a stronger economy and a chance of a rate hike to cool it down. In Q1, the utilization rate climbed to 74.2%. A similar rate is expected now.


3. Manufacturing Sales: Published on Wednesday, 12:30. Sales at the gates of manufacturers serve as a good gauge. This stable indicator rose by 0.1% last month, weaker than previous months but exceeding expectations of a drop. Another modest rise is predicted now.

All times are GMT.

USD/CAD Technical Analysis

The Canadian dollar’s week didn’t start of well – An initial drop lower failed and USD/CAD rose to test the 1.05 line (mentioned in last week’s outlook). It then made a sharp drop under 1.04 and tested 1.0280 before closing at 1.0366.

The 1.04 line was the bottom border of a long-term wide range between 1.04 and 1.0750, and now serves as a minor resistance line. Above, 1.05 capped the pair in the past week and also a few weeks ago – it’s now a strong resistance line.

Higher, 1.0680 is a double and stubborn top – it capped USD/CAD at the end of August and also at the beginning of July. Above this line, the pair will meet resistance at 1.0750 which was a resistance line in May last time, and then 1.0850, a swing high in May that also provided resistance back in 2009.

Looking down, 1.0280 supported the pair in July and was also tested in the past week – making it a strong support line. Lower, 1.02 was the 2009 low and also worked as a resistance line after the pair hit parity. It’s now a minor support line.

Lower, the 1.01 line provided support in May and in August and is a strong support line before the ultimate line – parity.

I remain bearish on USD/CAD.

This week’s excellent job figures, among other figures, showed that Canada is on the right track, and will outshine other countries.

USD/JPY Weekly Technical Forecast (SEP 13-17 2010)

The internal elections in Japan’s ruling party are the main theme this week, among other events. Here’s an outlook for the Japanese events and an updated technical analysis for the falling USD/JPY.

USD/JPY daily chart with support and resistance lines marked. Click to enlarge:



There has been a lot of talk about an intervention to weaken the yen. Only a coordinated intervention can have a long term effect. Will it happen this week? Or will the talk continue? Let’s start:

1. Revised Industrial Production: Published Tuesday, 4:30. Japanese industrial output showed a modest rise of 0.3% according to the initial release. This came after a drop of 1.1% drop in the previous month. The rise will probably be confirmed now.


2. Leadership elections: Tuesday. The Japanese prime minister, Naoto Kan, has been in office only for a few months, and is now challenged by Ichiro Ozawa,  a veteran politician. Mr. Ozawa raised the issue of the strong yen many times during his election campaign and put it high on the agenda. A victory by Ozawa means yet another prime minister for Japan, the third this year. Political uncertainty and the vow to fight the strong yen may hurt the yen. A victory by current PM Kan will boost the yen.


3. Tertiary Industry Activity: Published Wednesday, 23:50. This services sector indicator is a good gauge for the Japaneses economy. The past two months shows a decline of 0.9% and 0.1%. A rise of 0.7% is expected this time.


4. Masaaki Shirakawa talks: Begins speaking on Thursday, 6:00. The governor of the BOJ will speak at a conference in Tokyo and is likely to mention the high level of the yen. If he reiterates the words from previous appearances, the market will dismiss it. Only firmer talk can move the currency.

All times are GMT.

USD/JPY Technical Analysis

USD/JPY began the week by dropping lower, setting a fresh 15-year low at 83.34. It didn’t stay there too long and gradually climbed higher, to close at 84.16.

84.80, which was a support line in August and also a swing low in November, now serves a strong resistance line. Above this line, the next line that will cap the dollar in case of surge is the 86.30 line which was a support line twice in July.

Higher, 88 was a cushioned the pair in October, March and May. Higher, there are two lines close to each other – 89.15 was a resistance line in July and a support line in May, and 89.75, a weaker line, which provided support in March.

Downtrend channel – the recent descent of USD/JPY is characterized in an imperfect downtrend channel – the downtrend resistance was formed from the 89.15 line and continued with two perfect touches. The downtrend support that was formed earlier (in June) served as perfect support three times since then, but was also violated briefly once.

I am bullish on USD/JPY.

The talks about intervention are mounting – while they have proved fruitless up to now, there’s a chance of an intervention due to the depth this pair reached, and the internal political tensions that the currency is causing in Japan. Only a globally coordinated intervention will have a big long term impact.

EUR/USD Weekly Summary: Risk appetite helps Euro hold above technical support

The EUR/USD had a bearish momentum this week. Opened at 1.2892, price bottomed at 1.2643, which is the 23.6% Fibonacci retracement of 1.5140 - 1.1876, and closed at 1.2710 on Friday. On daily chart below we can see that price has been indecisive from Wednesday to Friday after dropped significantly on Tuesday. Price made some attempts to break below the trend line support but a serial of better than expected economic data from UK (Halifax HPI),  US (Trade balance, Unemployment Claims)  and Euro zone itself (French Industrial Production)  triggered risk appetite sentiment and hold the Euro above trend line support. I still believe that the major technical scenario remains bearish. Judging from the price action after the data release, the bullish reactions were short lived indicating bearish pressure is still alive and kicking. For the upcoming week, my technical focus remains to see what happen to the trend line support. Consistent move below the trend line support and 1.2643 could trigger further bearish continuation at least testing 1.2523 even lower. But if we keep seeing rejection to move below the trend line support, the bearish pressure may get exhausted and on the other hand, the upside pressure could gain some momentum testing 1.2770. Break above that area could trigger further upside pressure testing 1.2850 - 1.2930 region. Let's see what will happen and hope we can react correctly to any facts in the market.

EUR/USD Weekly Summary: Testing 1.2930, the bearish outlook is in serious threat

The EUR/USD had a significant bullish correction this week. On h4 chart below we can see price break above my minor trend line resistance (yellow) to the upside indicating potential further bullish momentum testing the key resistance level 1.2930 area. Break above that area could be seen as potential bearish failure and bullish reversal in medium term testing the major trend line resistance (red) and 1.3115 area which is the 38.2 Fibonacci retracement of 1.5140 - 1.1876. On the downside, only a violation to the downside on the bullish channel and bearish pullback below 1.2800 could stop the current strong bullish momentum and keep the medium term bearish outlook intact.

AUD/USD Weekly Technical Forecast (Sep 6-10 2010)

After a great week, another busy one expects Aussie traders. The RBA’s rate decision and employment figures are the highlights. Here’s an outlook for Australian events and an updated technical analysis for AUD/USD.

AUD/USD daily graph with support and resistance lines on it. Click to enlarge:



The Aussie enjoyed lots of good figures, with the Q2 GDP growth of 1.2% being a great positive surprise. The better-than-expected retail sales figure and especially building approvals, showed that also in Q3, the Australian economy is warming up once again. Will this lead to a renewal of rate hikes?

1. MI Inflation Gauge: Published on Monday at 12:30 GMT. The Melbourne Institute’s inflation gauge fills in for the government, that publishes an official inflation figure only once per quarter. According to MI, inflation slowed down from 0.5% three months ago, down to 0.1% last month. A similar 0.1% rise is expected this time.


2. ANZ Job Advertisements: Published on Monday at 1:30 GMT. The amount of jobs published in the media serves as a good indicator for the official employment figures released 3 days later. Last month saw a smaller growth in ads, only 1.3%, and indeed, the gain in jobs was slower than previous months. This time, the rise in ads is expected to slightly stronger.


3. AIG Construction Index: Published on Monday at 23:30 GMT. The Australia Industry Group showed that the construction sector is slowing down, even contracting in the past two months. The index was under the critical 50 point mark, and this shows an economic squeeze. This goes hand in hand with the slowdown in other housing sector figures – a result of the rate hikes. It’s expected to recover, but remain under 50 points this time.


4. Rate decision: Published on Tuesday at 4:30 GMT. 4 months have passed since the last rate hike, the sixth since the financial crisis. The hikes took their toll on the economy, and especially on real estate, so Glenn Stevens and his colleagues at the RBA decided to pause on recent months. Also now, the Cash Rate is expected to remain unchanged at 4.50%. The focus will be on the accompanying statement which will hint about future moves.


5. Home Loans: Published on Wednesday at 1:30 GMT. This important housing sector figure always rocks the Aussie. After a sharp fall of 3.9% last month and many bad months beforehand as well, the number of loans is expected to grow by 1.1% this time, boosting the Aussie.


6. Employment data: Published on Thursday at 1:30 GMT. After months of excellent figures, last month’s employment numbers were somewhat mixed. Employment Change rose by 23.5K, slightly better than expected, but the unemployment rate jumped to 5.3%, which was a quite a disappointment. A similar gain in jobs, 25.3K is expected now. The unemployment is expected to fall back down to 5.2%. Any result will rock the Aussie.


7. Guy Debelle talks: Starts speaking on Thursday at 3:00 GMT. RBA deputy governor Dr. Guy Debelle might say more about the fresh rate decision, and add prospects about the future. It’s important to note that in a speech last week, Debelle didn’t mention anything related to monetary policy.


8. Chinese Trade Balance: Published during Friday. Australia’s main trade partner has a strong impact on the Aussie. This time, the trade balance of the world’s second largest economy will be closely watched. This figure is also sensitive for the value of the Chinese yuan, which is closely monitored by the US. China’s surplus is expected to squeeze from 28.7 to 26.9 billion.

AUD/USD Technical Analysis

The Australian dollar dropped gradually at the beginning of the week, and found support at the 0.8870 line (mentioned in last week’s outlook). It then made a sharp recovery, crossing 0.90 easily, struggling with 0.9080 and finally jumping above 0.9135 to close at 0.9143.

The Aussie is now bound between the 0.9135 line which worked as support back in April, and 0.9220, which was a support line in March and also capped the Aussie at the beginning of August.

Looking down, 0.9080 is the next support line. It was a double top in July and the Aussie leaped above it during a weekend. Lower, the round number of 0.90 provides support. This psychological number was also a swing low in March.

The 0.8870 line was tested in the past week and also capped the pair twice in recent months. It now serves as strong support. 0.8735 was a low point in December 2009 and also in July – minor support now.

Lower, 0.8567 was a support line back in 2009, and also worked as resistance in May. Below, 0.8316 was a double bottom in July and provides strong support. The final line is the year-to-date low 0f 0.8066.

Looking up above 0.9220, the next line is a very strong one – 0.9327. It capped the Aussie many times in the past year. A break above this line will send the pair towards immediate resistance at 0.9366, which was a stubborn line in April.

The 2009 high of 0.9405 is the next resistance line, and it’s followed by 0.95, which was last reached only in 2008.

I remain bullish on the Aussie.

The past week’s strong GDP figures, and a good outcome from the job figures on this busy Australian week, should provide the basis for further gains.

NZD/USD Weekly Technical Forecast (Sep 6-10 2010)

The kiwi expects a rather lightweight week in terms of economic indicators, so the technicals will play a bigger role. Here’s an outlook for the events in New Zealand, and an updated technical analysis for NZD/USD.

NZD/USD daily graph with support and resistance lines on it. Click to enlarge:



The managed to break higher after frustrating. Will this trend continue?

1. Manufacturing Sales: Published on Tuesday at 22:45 GMT. While being a rather late figure, the quarterly frequency makes this number important. New Zealand is expected to enjoy a third straight quarter of growth in the volume of sales at manufacturers gates, after 0.7% and 0.9% rises beforehand.


2. Overseas Trade Index: Published on Thursday at 22:45 GMT. This indicator has proven very relevant for New Zealand. It measures the change in purchase power. The past two quarters were positive, with rises of 5.7% and 5.9%. Another quarter of growth is predicted now, but it will probably be more modest – 2.3%.

NZD/USD Technical Analysis

The kiwi had a bad start with a drop under 0.70. It bottomed out at 0.6947 before recovering. After a struggle with the 0.7160 line (mentioned in last week’s outlook), Friday’s move sent it temporarily above 0.72, reaching 0.7218 before closing just under 0.72.

NZD/USD is now in a narrow range between 0.7160, which was a stubborn peak in June and also in the past week, to 0.72, which also worked as support.

Below, 0.70 is a critical round number that is closely eyed by traders. Lower, 0.69 is the next line of support. It previously worked as a line of resistance in May, after the pair fell down sharply.

Below, 0.68, that was a swing low in mid-July and also held NZD/USD in February is the next support line. Lower, 0.6685 worked as support back in September and was a pivotal line in July. The final line for now is the year-to-date low of 0.6560.

Looking up, 0.7325 capped the pair during August and serves as the next resistance line if 0.72 is cleared. This is followed by  the 0.7440 region, which capped the pair when it traded higher.

Higher, 0.7523 was a swing high back in November 2009, and serves as a minor line of resistance. Even higher, the 0.7634 peak reached almost a year ago, is the final frontier for now.

I am neutral on NZD/USD this week.

Without really important data, the kiwi is likely to swing with the mood in the global markets. The earthquake that hit the country’s southern island isn’t expected to cause an earthquake in currencies.

USD/CAD Weekly Technical Forecast (SEP 6-10 2010)

A very busy week expects loonie traders, including a rate decision and employment data. Here’s an outlook for the Canadian events, and an updated technical analysis for USD/CAD.

USD/CAD daily graph with support and resistance lines on it. Click to enlarge:



Canadian GDP for the second quarter, completed with the past week’s release for June, was somewhat disappointing, after two great quarters. The overall situation is still good. This week’s 7 important Canadian releases will shed a lot of light on the current situation. Let’s start:

1. Building Permits: Published on Wednesday at 12:30 GMT. This is a volatile, yet important gauge for the Canadian economy. Last month’s 6.5% rise in permits boosted the Canadian dollar and corrected the 8.2% fall that was seen in the previous month. The see-saw is predicted to continue with a drop of 5.8%.


2. Rate decision: Published on Wednesday at 13:00 GMT. There is no clear consensus about this rate decision. After two rate hikes, Mark Carney’s BOC is in a dilemma. On one hand, the economy is doing quite well, and there’s a fear of rising inflation. On the other hand, Canada’s main trader partner, the US, is suffering from a slowdown, that can undermine growth in Canada. So, both an unchanged Overnight Rate of 0.75% and a hike to 1% are equally possible. This means higher than normal volatility around the release. Aslo note the accompanying statement which will indicate future moves. A hike with a statement that there will be a pause from now on can weaken the loonie.


3. Ivey PMI: Published on Wednesday at 14:00 GMT. The Richard Ivey School of Business disappointed in its last release. The score fell to 54 points, showing that purchasing managers see less expansion. A similar number is expected this time. Only a rise above 50 points, as seen three months ago, will boost the loonie.  A rise to 55.8 is expected.


4. Housing Starts: Published on Thursday at 12:15 GMT. Complementing on the figure from the previous day, this housing figure wasn’t too good – it fell for the 4th straight month to 189K, the lowest level since February. Another curb is due now, to 185K.


5. Trade Balance: Published on Thursday at 12:30 GMT. Canada enjoyed a surplus in its trade balance up to April, but the number then turned negative, and even deteriorated to a deficit of 1.1 billion in last month’s release. This deficit will probably squeeze to 0.8 billion. Note that the American trade balance is released at the same time, making the timing very volatile for USD/CAD.


6. NHPI: Published on Thursday at 12:30 GMT. The last housing figure is an official release of the change in prices of new homes. After 3 months of a 0.3% rise, this stable indicator rose by only 0.1% last month. A stronger rise will probably be seen now. Due to the timing of the publication, together with the trade balance, the impact will probably be quite modest.


7. Employment data: Published on Friday at 11:00 GMT. The best is kept for last. After three superb months of big gains in jobs, including a surge of 93K jobs one time, last month saw a correction with a loss of 9300 jobs and a rise of the unemployment rate back to the round number of 8%. A gain of 17.6K in jobs is expected now, but the unemployment rate is likely to remain unchanged at 8%.

USD/CAD Technical Analysis

The Canadian dollar had a bad start to the week – USD/CAD failed to break below 1.05 and jumped towards the stubborn 1.0680 line (mentioned also in last week’s outlook). It then made another failed attempt to go under 1.05, but on Friday, this line finally broke and USD/CAD even extended its fall below the 1.04 line.

USD/CAD now trades between support line of 1.0280 and 1.04, which was a long-term bottom border of wide range. It’s now a minor resistance line.

Looking up, the next resistance line is at 1.05, which worked as a strong support line during most of the past week. Higher, the 1.0680 line was successfully tested for a second week in a row, making it a very strong resistance line.

Above, the 1.0750 line was the top border of a long term range, and also a swing high in May. Another swing high in May, the 1.0850 line, works as the next line of resistance, after working as such back in 2009 as well.

Lower, the 2009 low of 1.02 serves as the next line of support. Below, 1.01 capped the pair after it reached parity in April, and also was a low point a few weeks ago.

The ultimate line of support is parity – which got closer in the past week. Beyond parity, 0.98 and 0.97 provide support. They’re far now.

I remain bearish on USD/CAD.

The improvement in US jobs is good for Canada as well, as the US is Canada’s main trade partner. This week is very important for the loonie. A rate hike and positive job figures can send USD/CAD for another attempt on parity.

EUR/USD Is Ending Its Bullish Correction?

Euro/Dollar had another positive week, but it failed to break above the important long term resistance line. Also the short term trends show an exhaustion. Will it turn down?

EUR/USD began a strong upwards move on last week’s Non-Farm Payrolls but couldn’t break the resistance line. These moves came on top of US weakness and not on an improvement in Europe. Yohay already wrote about these issues earlier this week on forexcrunch . Now let’s look at another technical aspect.



Looking at the hourly chart, we can see a rising uptrend channel that accompanied the Euro in the past week. This can be seen in the graph. The top of this uptrend channel was challenged more than 3 times, and is very clear. As the Euro climbed upwards, it closely followed this top border.

The bottom border of this line was approached three times. While the pair stayed away from this line during most of the week, it closed at 1.2639, quite close to it. Together with the failure to making a convincing break above 1.2672 (which was the peak on May 21st) and settling at the bottom of the uptrend channel, this shows again that EUR/USD is out of air.

Apart for the regular events that are expecting us (detailed in the Euro dollar forecasts), there’s a very important one-time event on July 23rd – results of the bank stress tests. This will determine how the European banks are dealing with the debt crisis, the big issue looming over the Euro-zone in the past few months.

AUD/USD Weekly Technical Forecast (July 12-16 2010)

A variety of Australian releases and one Chinese release will move the Aussie in the upcoming week. Here’s an outlook for the Australian events, and an updated technical analysis for AUD/USD, now in higher ground.

AUD/USD daily chart with support and resistance lines. Click to enlarge:



The Australian economy enjoys a bubbling job market. The fresh figures came out significantly better than expected, and this gave a big boost to AUD/USD. Will this continue? Let’s start:

1. Home Loans: Published on Monday at 1:30 GMT. This important housing indicator reflects the impact of the rate hikes – less people are taking loans due to the high interest rate. After 7 consecutive months of drops, the number of loans is finally expected to rise, but at a very modest scale – 0.1%. This will provide a shaky start for AUD/USD at the beginning of the new week.


2. NAB Business Confidence: Published on Tuesday at 1:30 GMT. National Australia Bank has shown a significant drop in business confidence in the past three months – a drop from 19 to 5 points, although still positive, still showing optimism. This survey of 350 businesses will probably show another drop this time.


3. Westpac Consumer Sentiment: Published on Wednesday at 1:30 GMT. Westpac’s survey deals with the consumers. 1,200 consumers have shown less confidence in the past three months, with sharp drops of 5.7% and 7% in the past two months. This time, a small rise is expected.


4. MI Inflation Expectations: Published on Thursday at 1:30 GMT. The Melbourne Institute fills in for the gap created by the government, that publishes the CPI only once per quarter. According to MI, inflation is now weaker – 3.4% in comparison to a strong 4.1% figure three months ago. A drop under 3% will weaken the Aussie.


5. New Motor Vehicle Sales: Published on Thursday at 1:30 GMT. Vehicle sales are a strong indicator of consumption, but this indicator tends to be very volatile. After a rise of 8.4% two months ago, a drop of 3.2% was seen last month. A small rise is predicted now.


6. Chinese GDP: Published on Thursday at 2:00 GMT. Australia’s main partner continued to grow rapidly while the West suffered from economic contraction. In the past two quarters, the growth rate return to double digits: 10.5% in Q4 of 2009 and 11.9% in Q1. China releases the figures for Q2 quite early. They’re expected to show a growth rate of 10.5%, still very strong. The Aussie will gain from a stronger rise.

AUD/USD Technical Analysis

The Aussie had a bad start to the week, testing the 0.8315 support line, which it also tested in the previous week. It then began a rally during which it broke many resistance lines and eventually bounced at the resistance line 0f 0.88.

The Aussie is now in a tight range between 0.8735 (December’s low) and the round number of 0.88 which it just tested. Note that some lines have changed since last week’s outlook.

Below 0.8735, the next support line is 0.8567, which served as a strong support line during many months in the past year, and recently worked as a pivotal line. Below, 0.8505 is a minor support line.

Lower, 0.8390 worked as a minor support line in recent months. It’s followed by 0.8315, which was a double bottom in the past two weeks – this makes it a strong line of support now.

Even lower, 0.8240 is an old line of resistance that now serves as a support line, and its followed by the year-to-date low of 0.8066.

Looking up above 0.88, the next line of resistance is the round number of 0.90, which was tested in March and in May. Higher, 0.9327 is a very strong line of resistance which held the Aussie back lots of times in the past year.

Even higher, 0.94 was the 2009 high and its followed by the round number of 0.95, but they’re still far.

I remain bullish on the Aussie.

Once again, we’ve seen that the Australia is doing great – the economy gained lots of jobs. We’ll now probably see that Australia’s main trade partner, China, is also doing well, and this is likely to provide further strength for the Aussie.

AUD/USD Weekly Technical Forecast (July 12-16 2010)

A variety of Australian releases and one Chinese release will move the Aussie in the upcoming week. Here’s an outlook for the Australian events, and an updated technical analysis for AUD/USD, now in higher ground.

AUD/USD daily chart with support and resistance lines. Click to enlarge:



The Australian economy enjoys a bubbling job market. The fresh figures came out significantly better than expected, and this gave a big boost to AUD/USD. Will this continue? Let’s start:

1. Home Loans: Published on Monday at 1:30 GMT. This important housing indicator reflects the impact of the rate hikes – less people are taking loans due to the high interest rate. After 7 consecutive months of drops, the number of loans is finally expected to rise, but at a very modest scale – 0.1%. This will provide a shaky start for AUD/USD at the beginning of the new week.


2. NAB Business Confidence: Published on Tuesday at 1:30 GMT. National Australia Bank has shown a significant drop in business confidence in the past three months – a drop from 19 to 5 points, although still positive, still showing optimism. This survey of 350 businesses will probably show another drop this time.


3. Westpac Consumer Sentiment: Published on Wednesday at 1:30 GMT. Westpac’s survey deals with the consumers. 1,200 consumers have shown less confidence in the past three months, with sharp drops of 5.7% and 7% in the past two months. This time, a small rise is expected.


4. MI Inflation Expectations: Published on Thursday at 1:30 GMT. The Melbourne Institute fills in for the gap created by the government, that publishes the CPI only once per quarter. According to MI, inflation is now weaker – 3.4% in comparison to a strong 4.1% figure three months ago. A drop under 3% will weaken the Aussie.


5. New Motor Vehicle Sales: Published on Thursday at 1:30 GMT. Vehicle sales are a strong indicator of consumption, but this indicator tends to be very volatile. After a rise of 8.4% two months ago, a drop of 3.2% was seen last month. A small rise is predicted now.


6. Chinese GDP: Published on Thursday at 2:00 GMT. Australia’s main partner continued to grow rapidly while the West suffered from economic contraction. In the past two quarters, the growth rate return to double digits: 10.5% in Q4 of 2009 and 11.9% in Q1. China releases the figures for Q2 quite early. They’re expected to show a growth rate of 10.5%, still very strong. The Aussie will gain from a stronger rise.

AUD/USD Technical Analysis

The Aussie had a bad start to the week, testing the 0.8315 support line, which it also tested in the previous week. It then began a rally during which it broke many resistance lines and eventually bounced at the resistance line 0f 0.88.

The Aussie is now in a tight range between 0.8735 (December’s low) and the round number of 0.88 which it just tested. Note that some lines have changed since last week’s outlook.

Below 0.8735, the next support line is 0.8567, which served as a strong support line during many months in the past year, and recently worked as a pivotal line. Below, 0.8505 is a minor support line.

Lower, 0.8390 worked as a minor support line in recent months. It’s followed by 0.8315, which was a double bottom in the past two weeks – this makes it a strong line of support now.

Even lower, 0.8240 is an old line of resistance that now serves as a support line, and its followed by the year-to-date low of 0.8066.

Looking up above 0.88, the next line of resistance is the round number of 0.90, which was tested in March and in May. Higher, 0.9327 is a very strong line of resistance which held the Aussie back lots of times in the past year.

Even higher, 0.94 was the 2009 high and its followed by the round number of 0.95, but they’re still far.

I remain bullish on the Aussie.

Once again, we’ve seen that the Australia is doing great – the economy gained lots of jobs. We’ll now probably see that Australia’s main trade partner, China, is also doing well, and this is likely to provide further strength for the Aussie.

NZD/USD Weekly Technical Forecast (July 12-16 2010)

Retail sales and the all-important CPI are the major events that will rock the kiwi this week. Here’s an outlook for the events in New Zealand, and an updated technical analysis for NZD/USD.

NZD/USD daily chart with support and resistance lines. Click to enlarge:



The kiwi advanced after crossing the round number of 0.70. It’s further steps depend now on inflation, which will determine the outcome of the next rate decision. Let’s start:

1. FPI: Published on Monday at 22:45 GMT. This monthly gap fills the gap that the government creates by releasing inflation figures only once per quarter. The prices of food, which fell in the past two months, is expected to rise this time. This will be an indicator for the CPI released later in the week.


2. Retail Sales: Published on Tuesday at 22:45 GMT. Consumers disappointed in the past three months. Sales grew less than expected, or fell more than expected. This important indicator hurt the kiwi. After a drop of 0.6% last month, a rise of 0.6% is predicted now. Also note core retail sales, which fell by 0.2% and are likely to rise by 0.6% now. We’ve seen a strong impact when retail sales fell two months ago.


3. Business NZ Manufacturing Index: Published on Wednesday at 22:30 GMT. This survey of manufacturers fell from the peak it reached two months ago and dropped from 58.6 to 54.5 points. Another drop is expected now, but the number will probably remain above 50, meaning economic expansion.


4. CPI: Published on Thursday at 22:45 GMT. A rise in the consumer price index is the key to an intense tightening cycle by the central bank, that already began. Last quarter’s rise of 0.4% will probably be followed by a rise of 0.5% this time. A jump above 1% will boost the kiwi.

NZD/USD Technical Analysis

The kiwi continued struggling with the 0.6910 line at the beginning of the week, but then made a strong move upwards and broke above the round number of 0.70 to close just under 0.71.

NZD/USD’s range is between the round support line of 0.70 and the next resistance line of 0.7160, which was a stubborn top during June. The next line of resistance is at 0.72, which capped the kiwi in the past.

Higher, May’s highs of 0.7325 provide the next strong resistance line. This was an area of resistance also in December. The last line of resistance is at 0.7440, which was a peak at the beginning of the year.

Looking down below 0.70, 0.6910 provides the next support line. It has been a pivotal line recently. Lower, 0.68 provides support very recently and also in February, and is the next line of support.

There are many lines below, but the most notable one is 0.6560, which was the year-to-date low.

I remain bullish on the kiwi.

With a stable, growing economy, and with a cycle of rate hikes that already began, it’s likely to gradually rise.

NZD/USD Weekly Technical Forecast (July 12-16 2010)

Retail sales and the all-important CPI are the major events that will rock the kiwi this week. Here’s an outlook for the events in New Zealand, and an updated technical analysis for NZD/USD.

NZD/USD daily chart with support and resistance lines. Click to enlarge:



The kiwi advanced after crossing the round number of 0.70. It’s further steps depend now on inflation, which will determine the outcome of the next rate decision. Let’s start:

1. FPI: Published on Monday at 22:45 GMT. This monthly gap fills the gap that the government creates by releasing inflation figures only once per quarter. The prices of food, which fell in the past two months, is expected to rise this time. This will be an indicator for the CPI released later in the week.


2. Retail Sales: Published on Tuesday at 22:45 GMT. Consumers disappointed in the past three months. Sales grew less than expected, or fell more than expected. This important indicator hurt the kiwi. After a drop of 0.6% last month, a rise of 0.6% is predicted now. Also note core retail sales, which fell by 0.2% and are likely to rise by 0.6% now. We’ve seen a strong impact when retail sales fell two months ago.


3. Business NZ Manufacturing Index: Published on Wednesday at 22:30 GMT. This survey of manufacturers fell from the peak it reached two months ago and dropped from 58.6 to 54.5 points. Another drop is expected now, but the number will probably remain above 50, meaning economic expansion.


4. CPI: Published on Thursday at 22:45 GMT. A rise in the consumer price index is the key to an intense tightening cycle by the central bank, that already began. Last quarter’s rise of 0.4% will probably be followed by a rise of 0.5% this time. A jump above 1% will boost the kiwi.

NZD/USD Technical Analysis

The kiwi continued struggling with the 0.6910 line at the beginning of the week, but then made a strong move upwards and broke above the round number of 0.70 to close just under 0.71.

NZD/USD’s range is between the round support line of 0.70 and the next resistance line of 0.7160, which was a stubborn top during June. The next line of resistance is at 0.72, which capped the kiwi in the past.

Higher, May’s highs of 0.7325 provide the next strong resistance line. This was an area of resistance also in December. The last line of resistance is at 0.7440, which was a peak at the beginning of the year.

Looking down below 0.70, 0.6910 provides the next support line. It has been a pivotal line recently. Lower, 0.68 provides support very recently and also in February, and is the next line of support.

There are many lines below, but the most notable one is 0.6560, which was the year-to-date low.

I remain bullish on the kiwi.

With a stable, growing economy, and with a cycle of rate hikes that already began, it’s likely to gradually rise.

GBP/USD Is Range Bound– Will it Fall?

GBP/USD is trading in an almost perfect range in the past week. The longer the range – the stronger the explosion, but in which direction? Here are some reasons for it to go down.

Last Friday, GBP/USD enjoyed the weak Non-Farm Payrolls in the US to rise to new levels. Since then, it has traded in an almost perfect range – from 1.5080 to 1.5240. This 160 pip range saw three tops and three bottom throughout the week, without breaking out. But the situation doesn’t look good for the Pound:

Recent economic data is mostly negative. British Services PMI disappointed with a drop to 54.4 points, worse than expected. Halifax HPI, which shows the change in house prices, fell by 0.6% instead of rising by the same scale. Manufacturing Production fell short of expectations as it rose by only 0.3%, and last month’s drop was revised – 0.8% instead of 0.8% – double.

But the biggest disappointment came from interest rate issues. First, the Bank of England didn’t raise the rates. While this was the consensus, this came after we saw that one member voted to raise the rates last month – Andrew Sentance’s vote came on rising inflation that missed the government’s target month by month.

The decision not to raise the rates was later backed with the PPI figures – producer prices dropped last month by 0.2% when expectations stood on a rise of 0.1%. So, maybe the inflationary pressures aren’t too strong?

Similar to the Euro, it seems that the British Pound mostly enjoyed the US dollar’s weakness rather than its own strength. A drop will find immediate support at 1.5050, followed by 1.4870 and 1.4780. A breakout to the upside will meet resistance at 1.5350, followed by 1.5530 and 1.5833.

EUR/USD Pusing Forward to Touch 1.27..

EUR/USD continued pushing forward and touched 1.27. At this point, it seems that the heights aren’t easy for the pair, that still carries debt issues and gloomy forecasts. Update on this pair.

Euro/Dollar continued the trend that began with the weak Non-Farm Payrolls on Friday and gradually edged up during the week – from the support line of 1.2460, it rose in waves and reached 1.2702, breaking 30 pips above the 1.2672 peak it reached on May 21, in the recovery rally that followed the turmoil.

So, at this point, the highest since the beginning of May, the pair seems exhausted. EUR/USD fell back down to 1.2660 after reaching the new highs. The break seems false and the next line of resistance, 1.2880 is out of reach. 1.2880 was a support line in May 2009.

Below 1.2460, support appears at 1.2330, 1.2250 and most importantly 1.2150. Above, 1.3110 is the next resistance line.

Reasons for Euro rally

The recent Euro rally came on top of weak economic figures in the US, and especially the Non-Farm Payrolls, that disappointed two months in a row. The sentiment is that the US economic recovery is much weaker than expected, meaning low interest rates for a very extended period of time. With a weak US economy, how can the dollar rise?

But there’s something else: the risk factor. The Euro didn’t rally on its own strength, but on US weakness. US weakness is global weakness, and this will eventually trigger risk aversive trading.

The situation in the Euro-zone isn’t good. The European teams might be good football / soccer, but their economies aren’t doing well.

Top economists say that the worst is yet to come:

Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto, said the euro will depreciate to $1.13 in the third quarter, $1.08 by year-end and may near $1 in 2011 before recovering. Osborne, whose predictions were within 4.1 percent of the mark on average, according to data compiled by Bloomberg, was echoed by the nine following most-accurate forecasters in anticipating a lower euro in the next two quarters.

When fear will return to the markets, the Euro will suffer. The dollar and the yen will rise. So, if you’re enjoying this current risk rally, you better watch out before the tables turn once again.

EUR/USD Weekly Technical Forecast (June 28-July 2 2010)

The troubled Euro expects inflation and employment figures in the upcoming week. Here’s an outlook for the events that will move the Euro, and an updated technical analysis for EUR/USD.

EUR/USD daily chart with support and resistance lines on it. Click to enlarge:



In the past week, the Euro got a positive indicator from the German Ifo Business Climate, but the impact was very limited. This week has more significant indicators. Let’s begin:

1. German CPI: Published on Monday. After showing some signs of picking up, inflation returned to normal in the past two months, rising by 0.1% last month, after a drop in the same small scale beforehand. The initial version of the CPI is collected from the various German states throughout the day. A small rise is expected this time.


2. M3 Money Supply: Published on Monday at 8:00 GMT. The amount of money in circulation usually rises, but the drop seen in the past 3 months is another evidence of less economic activity and an upcoming double-dip recession. Another drop of 0.1% is expected this time.


3. German Unemployment Change: Published on Wednesday at 7:55 GMT. This important figure shows that Germany continues to be the locomotive of the Euro-zone. The number of unemployed people squeezed by 45,000 people, for a third month in a row. Another small drop is expected now. Note that the actual figure was usually better than early forecasts.


4. CPI Flash Estimate: Published on Wednesday at 9:00 GMT. Following Germany’s first release for the inflation figures, the figure for the whole continent is also published. The annualized level of inflation rose to 1.6% last month – still under control. Only a jump above 2% could be significant for the Euro, and this isn’t expected now.


5. Unemployment Rate: Published on Friday at 9:00 GMT. The all-European unemployment rate is very problematic – 10.1%. The area of 10% has been with us for the past 7 months and this isn’t about to change. Any rise will be a burden on the Euro, and only a fall to a single digit figure will boost the common currency.

EUR/USD Technical Analysis

The Euro began the week by descending from a failed attempt to break above 1.2460, and eventually dropped below 1.2330. A false break under 1.2250 was followed by a jump, and the pair closed at 1.2375.

The Euro’s range is 1.2330 to 1.2460. Note that more lines were added on last week’s outlook. The trading ranges of the pair are more narrow now.

Above the strong line of 1.2460, a minor resistance line appears at 1.2520, which was a swing low when the pair was dropping from higher levels. Higher, 1.2670 provides strong resistance, being the highest level in over a month.

Higher, 1.2880 is the next minor line, followed by 1.3114, which was tested from both directions, but that’s quite far now.

Looking down, the Lehman levels at 1.2330 continue to play a small role. The next level of support is at 1.2250, which the pair failed to break in the past week. 1.2150 is a very strong line – it held the pair for some time, and when it collapsed, the fall was quite strong.

1.20 is a round number eyed by many, so it provides further support, and the last line is 1.1876, the year-to-date low.

I remain neutral on Euro/Dollar.

As mentioned last week, range trading indeed continued for another week. Given the looming double dip recession, the European debt issues and risk aversive trading due to slowdown in the US as well, the long term sees further drops. But for now, the narrowing ranges are still with us.

AUD/USD Weekly Technical Forecast (June 28-July 2 2010)

Retail Sales as well as building approvals are the highlights in a busy Australian week. Will the Aussie continue north? Here’s an outlook for the Australian events and an updated technical analysis for AUD/USD.

AUD/USD daily chart with support and resistance lines on it. Click to enlarge:



The Chinese move on the yuan is great for Australia, that exports commodities to China. With a stronger yuan, the Chinese can buy more. As the dust settled from  this move, the political problems in Australia hurt the Aussie. With the new Prime Minister sworn in, the focus returns to fundamentals:

1. HIA New Home Sales: Publication time unknown at the moment. The Housing Industry Association showed a bit leap in prices last month – 6.2%. This comes despite the rate hikes that partially cooled the Australian housing sector. A smaller rise is expected this time.


2. MI Inflation Gauge: Published on Tuesday at 00:30 GMT. The official inflation figures are released only once a quarter. So, this unofficial release from the Melbourne Institute tends to moves the Aussie. After rises of 0.4% or 0.5% in recent months, a weaker rise in prices is predicted this time.


3. Private Sector Credit: Published on Wednesday at 1:30 GMT. More lending means more economic activity, but last month’s small rise of 0.2% was quite disappointing for the Aussie. This followed 4 stronger months. A return to higher growth rates will probably be reported by the RBA this time.


4. AIG Manufacturing Index: Published on Wednesday at 23:30 GMT. The Australia Industry Group publishes a PMI-like indicator that has been above 50 in the past 5 months. This means expectations for economic expansion. The drop from the high 59.8 points to 56.3 last month is expected to be followed by a stable number this time.


5. Chinese Manufacturing PMI: Published on Thursday at 1:00 GMT. China is Australia’s main trade partner. Growth in Chinese manufacturing translates into more imports from Australia. After peaking at 55.7 points, this Chinese indicator fell to 53.9 points this time. A rise is expected this time.


6. Retail Sales: Published on Thursday at 1:30 GMT. This major consumer-related indicator rose by 0.6% last month, showing confidence for a second month in a row, despite the rate hikes. A smaller rise is expected this time.


7. Commodity Prices: Published on Thursday at 6:30 GMT. Australia’s commodity-oriented economy enjoyed a recovery in commodity prices in June. This will be reflected in this  indicator that is expected to show a year-over-year growth rate of over 50%, boosting the Aussie.


8. Building Approvals: Published on Friday at 1:30 GMT. This indicator is very volatile, and tends to have a strong impact on the Aussie. A drop of almost 15% was reported in approvals last month, but this was merely a correction for a 17% rise beforehand. A rise in approvals will empower the Aussie.

AUD/USD Technical Analysis

The Aussie’s crazy week began with a temporary jump above 0.8735 and then 0.88, but this changed quickly. The pair deteriorated quickly and dipped below 0.86 before recovering and settling slightly higher than last week – at 0.8741. Note that most lines haven’t changed since last week’s outlook.

Looking up, 0.88 continues to be a minor line of resistance, and the break above it was false. Higher, 0.90 is a round psychological number and also was a swing low in March.

Higher, 0.9135 was a very strong line of support when the pair was trading higher, and now works as resistance. The next important line far above is 0.9327, which was a strong line of resistance many times in the past.

Looking down, immediate support is found at 0.8735, which was December’s low, and worked as a line of resistance in the previous week. Lower, 0.8360 was a pivotal line a few weeks ago.

Lower, 0.8240 was a strong resistance line in 2009 and worked when the pair was trading lower recently. Below, the year-to-date low of 0.8066 provides strong support. That’s quite far now.

I remain bullish on the Aussie.

The political crisis that rocked the Aussie is over, with a new Prime Minister, Julia Gillard, quickly assuming office. With the revaluation of the Chinese yuan, a high interest rate and strong economy, the Australian dollar continues to have good reasons to rise.

USD/CAD Weekly Technical Forecast – June 28 – July 2

Canadian monthly GDP is the highlight in the upcoming week. Here’s an outlook for the Canadian events and an updated technical analysis for USD/CAD.

Canadian CPI came out as expected, and this wasn’t loonie-positive. There’s no rush for speedy tightening cycle by the central bank.
RMPI: Published on Tuesday at 12:30 GMT. The Raw Materials Price Index made a leap in last month’s release – 1.7%, stronger than expected. The Canadian dollar isn’t expected to enjoy this indicator now, as the figure relates to May, a bad month in the global markets.
GDP: Published on Wednesday at 12:30 GMT. The Canadian economy grew by 0.6% in March, better than expected. This concluded a great first quarter with an annual growth rate of 6.1%, double the American growth rate. A similar growth rate is expected in April, the first month of Q2.

USD/CAD Technical Analysis

After making a small dip under 1.02 the pair ascended and struggled with 1.03 (a new line that didn’t appear in last week’s outlook) and eventually rose above temporarily above 1.04 before closing at 1.0350.

Looking up, 1.04, that was the boundary of the 1.04 to 1.0750 range is still a minor line of resistance. Above we get resistance at 1.0560 that was a pivotal line in recent weeks.

Higher, 1.0750 worked as a resistance line during May and also in 2009. It’s followed by 1.0850, which was similarly a line of resistance about a year ago and also a month ago. Even higher, 1.1130 remains a distant line.

Looking down, 1.03 provides immediate support, and it’s followed by 1.02 – the 2009 low which also played a role in capping the pair after it reached parity. USD/CAD parity is the ultimate support line.

A break below parity, which isn’t likely in the upcoming week, will send the pair towards 0.98 and then 0.97.

I remain bearish on USD/CAD.

The Canadian economy is doing great, better than the American one. This week’s GDP release should provide a fresh boost.

USD/CAD Weekly Technical Forecast (June 21-25 2010)

The loonie enjoyed risk appetite for a second week in a row. This week consists of key indicators for the next rate decision. Here’s an outlook for Canadian events and an updated technical analysis for USD/CAD, which is closer to parity once again.

USD/CAD chart with resistance and support lines on it. Click to enlarge:



The markets disregard the European trouble (with focus now on Spain again) and seek “risky” currencies. The Canadian dollar also enjoys the rising price of oil, and his its eyes on parity. Prices need to rise in other areas in order to push inflation. Let’s start:

1. CPI: Published on Tuesday at 11:00 GMT. A rise in the consumer price index is necessary for further rate hikes, after the BOC made its first move. Current inflation conditions are still tame. CPI rose by 0.3% last month after remaining unchanged beforehand, and Core CPI, which is also closely watched by the central bank, also rose by 0.3%. More modest rises are expected this time.


2. Retail Sales: Published on Wednesday at 12:30 GMT. This major consumer indicator made a surprising jump last month – 2.1% instead of 0.2% that was predicted. Also the core figure was a big surprise, jumping by 1.7%. Yet again, the expectations remain modest, with a rises of less than 1% predicted in both indicators.

USD/CAD Technical Analysis

The Canadian dollar continued the trend from last week, and after falling below 1.04, USD/CAD continued to fall gradually towards the next support line – 1.02, which it closed very close to, at 1.0210.

1.02 continues to be a dominant line – this was the 2009 low and also a line of resistance when the pair reached parity. A break below 1.02 will send the pair towards minor support at 1.01 (a line that was added on last week’s outlook).

Below 1.01 comes the ultimate support line – parity. USD/CAD parity was last seen in April but didn’t hold for too long. Lower, 0.98 is a minor line of support, followed by 0.97. A bigger surge in oil prices is necessary for the pair to approach these areas.

Looking up, the immediate resistance line is at 1.0560, which served as a line of support and resistance in recent weeks. Higher, 1.0750 was the high line of long time range, and was also tested about a month ago. It’s followed by 1.0850, which was a swing high before the pair went lower.

I remain bearish on USD/CAD.

As the fear factor leaves the markets, the Canadian dollar, with a growing economy, receives the strength it deserves. Next stop – parity.

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EUR/USD Weekly Technical Analysis (June 7-11 2010)

The troubled Euro, hit by Hungary and risk aversive trading following the Non-Farm Payrolls, is facing a busy week, with the rate decision being the climax. Here’s an outlook for the European events, and an updated technical analysis for EUR/USD.

EUR/USD chart with support and resistance lines on it.


No matter how the debt issues are handled, it now seems clear that the Euro-zone, either united or split, is facing a double dip recession. Austerity measures will take their toll on the economies, and the Euro as well. As European leaders are lowering their tone, the indicators return to play an important role. Let’s start:
Sentix Investor Confidence: Published on Monday at 8:30 GMT. LAst month, this important indicator perfectly reflected the economic turmoil, in real time. This survey of 2,000 analysts and investors turned negative – from +2.5 to -6.4. A negative figure means pessimism. This pessimism is expected to weaken this time, with a rise to -3.4 points.
German Factory Orders: Published on Monday at 10:00 GMT. Europe’s largest economy enjoyed a huge leap in factory orders in the last release. A small correction is expected this time – 0.1%. Note that the figure relates to April, and that the report for May will probably be worse.
German Industrial Production: Published on Tuesday at 10:00 GMT. Complementing the factory orders figure, industrial production in Germany also made a significant jump last time – 4%, but is expected to continue rising this time as well, by 0.7%. The result of the factory orders will probably indicate the direction of this figure as well.
German Final CPI: Published on Thursday at 6:00 GMT. It seemed that prices were picking up in Europe, led by its largest economy. But last month already saw them cooling down, with a drop of 0.1%. This release will probably confirm another calm month, with a rise of only 0.1%, as initially reported.
French Industrial Production: Published on Thursday at 6:45 GMT. Europe’s second largest economy also enjoyed nice growth in its industrial production last month – a rise of 1%. Growth is expected to accelerate this month – 1.2%. While there are talks of a credit downgrade for France as well, its economy is rather strong.
Rate decision: Published on Thursday at 11:45 GMT. Jean-Claude Trichet isn’t expected to change the European Minimum Bid Rate. Yet again, he’s expected to leave it unchanged at 1%. A small rise in inflation put some pressure for a rate hike, but the rise in prices isn’t too strong. On the other hand, the dire situation in the Euro-zone prompts slashing the rates, but the ECB isn’t too keen on such a move. The focus will be on the ECB Press Conference, where hints about future policy and remarks about the current situation will be closely watched.

EUR/USD Technical Analysis

The “Lehman levels” at 1.2330 capped EUR/USD during the week, as it traded between this line and last week’s low of 1.2142. On Friday, this range trading was broken, as the pair collapsed below this support line and closed under 1.20, at 1.1968.

Lower support lines were added on last week’s outlook. The current range is between 1.20, which is a round number eyed by many, and 1.1820, which was a support line back in 2006.

Looking down, the next line of support is at 1.17. This is a symbolic number – this is the level that the Euro launched at, in 1999, as an interbank currency, before there were euro coins and bills. Below, 1.1630 – this was the bottom in November 2005, and now provides strong support.

A drop below this line sends the Euro back to levels last seen in 2003. Minor support is found at 1.1560, followed by stronger support at 1.1370. Even lower, 1.11 is the next support line, serving as both a support and resistance line back at the beginning of 2003, 7 years ago.

Looking up above 1.20, the next line of resistance is at 1.2142, the former resistance line. This is followed by 1.2330 mentioned earlier.

Higher, 1.2460 is a strong line of resistance, capping the pair a few weeks ago. The next line is at 1.2670, which was a swing high. There are many more resistance line above, but they’re quite far at the moment.

I remain bearish on EUR/USD.

Yes, the Euro already lost a lot of ground, and some may say it’s oversold. But these falls are backed by an unstoppable flood of bad news. In the past week, it was Hungary, which compared itself to Greece. More debt black holes will probably be discovered, pushing the Euro lower.

AUD/USD Weekly Technical Analysis (June 7-11 2010)

After another week of tense range trading, another busy week expects the Aussie, with employment data being the climax. Here’s an outlook for the Australian events, and an updated technical analysis for AUD/USD.

AUD/USD chart with support and resistance lines on it. Click to enlarge:



The past week saw two important releases: GDP and the rate decision that were OK. The Aussie didn’t fully enjoy them. Will employment numbers boost the currency? Let’s see:
AIG Construction Index: Published on Sunday at 23:30 GMT. This gauge for the housing sector from the Australian Industry Group jumped back above 50 points last month, indicating economic expansion. From 55.8 points last month, it’s expected to edge down.
ANZ Job Advertisements: Published on Monday at 1:30 GMT. This is often regarded as an indicator towards the official employment figures due later in the week. The amount of jobs advertised in newspapers unexpectedly fell by 1.2% last month, hurting the Aussie. A small rise is predicted this time.
Westpac Consumer Sentiment: Published on Wednesday at 1:30 GMT. This survey of 1200 consumers already reflected the recent turmoil last month, with a drop of 7%. The upcoming release should show a small correction – a small rise. This indicator tends to move the Aussie, due to its freshness.
Home Loans: Published on Wednesday at 1:30 GMT. The amount of loans given towards buying homes dropped in the past 6 months, disappointing the Aussie over and over again. This is a direct result of the tightening policy by the RBA – higher interest rates make mortgages less attractive. Another drop is due this time – 1.9%.
NAB Business Confidence: Published on Wednesday at 1:30 GMT and overshadowed by home loans. 550 businesses are polled for National Australia Bank’s survey. This important survey is already off the peak of 19 points it scored two months ago. From 13 points, another small drop is expected now.
MI Inflation Expectations: Published on Thursday at 1:00 GMT. The Australian authorities publish the CPI only once a quarter, so this indicator by the Melbourne Institute, fill the gap. After leaping to 4.1%, expectations fell back to more normal levels – 3.6%, also a result of the rate hikes. It’s expected to remain almost unchanged this time.
Employment data: Published on Thursday at 1:30 GMT. The best is kept for last. Last month’s employment figures surprised with a leap of 33,700 jobs, about 50% more than expected. But now, only half of this gain is predicted – 16,100. On the other hand, the unemployment rate ticked up to 5.4% – a figure which isn’t expected to change this time. Any outcome will rock the Aussie.

AUD/USD Technical Analysis

The Aussie traded between the0.8240 support line and 0.85 during most of the week. On Friday the pair broke under 0.8240 but the break wasn’t convincing – the pair closed at 0.8231.

Most support and resistance lines haven’t changed since last week’s outlook, but the Aussie is positioned in a sensitive spot. The opening of the new week is critical for the Aussie. If the pair bounces back above 0.8240, the drop can be disregarded. Otherwise, it will open the road to lower levels.

The next line of support is at 0.8066, the area where the Aussie fell to in the big collapse at the beginning of May. Below, minor support is found at 0.7860, which was an area of resistance about a year ago.

Below, the 0.77 line provides strong support – the Aussie fell off from this line at the height of the financial crisis. It fell to 0.7450, which is the next line of support.

Looking up, 0.8477 is still a minor line of resistance, serving as such about 9 months ago. The stronger line of resistance is at 0.8567, which worked as a convincing line of support and resistance recently.

Further up the road, 0.88 worked as a support line, and now serves as a line of resistance. Higher, 0.90 is a round number and also provided support when the pair was trading higher.

I remain bullish on the Aussie.

The strong fundamentals that we’ve seen last week, and the employment figures which are usually good, should supply the fuel the Aussie needs to overcome the risk aversive trading that is caused by trouble overseas.