AUD/USD Weekly Fundamental Analysis May 28 – June 1, 2012, Forecast

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Introduction:  The Australian dollar still isn’t in its good old days, but the performance is definitely improving. Resistance lines tend to work in a smoother manner than support lines, but they also work well. The pair move well together, not much volatility, but easy to chart and easy to trade with low risk factors.

Weekly Analysis and Recommendation:

The AUD/USD closed a rocky week at 0.9768 which saw it continue to tumble. Unfortunately the strength of the USD as markets remained in risk aversion mode and negative eco data from Australia, the Aussie had very little chance to gather any strength. The Aussie is still recovering from the RBA rate reduction and growth reductions.

This week’s prices are shown below:

Highest: 0.9935

Lowest: 0.9690

Difference: 0.0245

Average: 0.9787

Change %: -1.58

Commodity currencies this week were stuck between the USD and the JPY as investors ran for cover over concerns with Greece’s possible exit from the euro and the growing problems with Spanish banks. The markets were also upset by statements from the IMF, the OECD, the World Bank and the IIF, all trying to push the EU into some plan of action. After the much expected EU mini summit with the disappointing conclusion, investors shied away from everything associated with the EU as the euro plummeted to record lows.

All the pacific nations and commodity currencies suffered.

Asian markets will have little capacity to influence the global tone with the possible exception of China’s state version of the purchasing managers’ index that is due out on Thursday night.  Consensus is expecting a modest drop to a still expansionary reading that lies at odds with the private sector PMI which remains in contraction, and with hard data on industrial production that has slowed markedly into the New Year.  Indian Q1 GDP is expected to come in at 6% y/y which would remain among the weakest growth rates of the past decade.  Japanese household spending, retail trade, industrial production and housing starts are also on next week’s schedule. RBA Governor Glenn Stevens’ delivers a speech into the Monday market open ahead of the June 5th RBA rate decision that consensus expects will yield no change in the cash target rate of 3.75%.  The RBA has cut by 100bps since October in two moves.

Major Economic Events for the week of May 21-25 actual v. forecast for Yen, the Aussie and the Kiwi

Currency

 

Actual

Forecast

Previous

NZD

Inflation Expectations q/q

2.4%

 

2.5%

JPY

Trade Balance

-0.48T

-0.60T

-0.62T

AUD

CB Leading Index m/m

0.2%

 

0.0%

AUD

MI Leading Index m/m

0.4%

 

0.0%

JPY

Overnight Call Rate

<0.10%

<0.10%

<0.10%

NZD

Trade Balance

355M

445M

186M

JPY

Tokyo Core CPI

-0.8%

-0.6%

-0.5%

 

Economic Highlights of the coming week that affect the AUD, JPY, NZD and USD

Date

Time

Currency

 

Previous

May 28

23:30

JPY

Household Spending y/y

3.4%

23:50

JPY

Retail Sales y/y

10.3%

May 29

TBD

AUD

HIA New Home Sales m/m

-9.4%

13:00

USD

S&P/CS Composite-20 HPI y/y

-3.5%

14:00

USD

CB Consumer Confidence

69.2

22:45

NZD

Building Consents m/m

19.8%

May 30

1:30

AUD

Retail Sales m/m

0.9%

1:30

AUD

Construction Work Done q/q

-4.6%

14:00

USD

Pending Home Sales m/m

4.1%

23:50

JPY

Prelim Industrial Production m/m

1.3%

May 31

1:00

NZD

NBNZ Business Confidence

35.8

1:30

AUD

Building Approvals m/m

7.4%

1:30

AUD

Private Capital Expenditure q/q

-0.3%

1:30

AUD

Private Sector Credit m/m

0.4%

1:30

JPY

Average Cash Earnings y/y

1.3%

12:15

USD

ADP Non-Farm Employment Change

119K

12:30

USD

Prelim GDP q/q

2.2%

12:30

USD

Unemployment Claims

370K

13:45

USD

Chicago PMI

56.2

15:00

USD

Crude Oil Inventories

0.9M

23:50

JPY

Capital Spending q/y

7.6%

Jun 1

12:30

USD

Non-Farm Employment Change

115K

12:30

USD

Unemployment Rate

8.1%

12:30

USD

Core PCE Price Index m/m

0.2%

12:30

USD

Personal Spending m/m

0.3%

14:00

USD

ISM Manufacturing PMI

54.8

Upcoming Government Bond Auctions

Date Time Country 

May 28- n/a  UK

May 28  09:10  Italy

May 29  00:30  Japan

May 29  09:10  Italy

May 29  09:10  Norway

May 30  09:10  Italy

May 30  09:10  Sweden 

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About: FX Empire Analyst - Barry Norman

Barry produces a private Daily Market Review newsletter that is distributed around the globe to over 25,000 subscribers and recently published a book on Options Trading that is available from amazon.com

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