AUD/USD Weekly Fundamental Analysis October 22-26, 2012 Forecast

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AUD/USD Weekly Fundamental Analysis October 22-26, 2012 Forecast

AUD/USD Weekly Fundamental Analysis October 22-26, 2012 Forecast

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 continued to climb this week hitting a high of 1.0412 and closing the week at 1.0332. The Chinese data will give a better understanding of the current Chinese economy, the PMI number will have to be above 49 to generate “risk-on trading activity.  The bigger risk is if it comes in lower as it will (call) into question the veracity of the data previously released. Last week the Chinese data dump showed that GDP fell to 7.4% as expected but retail sales and manufacturing reported above expectations.

The Australian inflation rate for the third quarter of 2012, scheduled for release on October 23rd, is set to remain below the Reserve Bank of Australia’s (RBA) medium-term target range of 2-3%. Economists estimate that consumer prices increased by 1.7% y/y in the July-September period, up from 1.2% in the prior quarter. The uptick is largely explained by the introduction of a carbon tax in mid-2012. Expect consumer price inflation to close the year at 2.7% y/y. In response to a softer economic growth outlook and manageable inflation prospects, the RBA cut the benchmark interest rate by 25 basis points to 3.25% in early October

Date

Last

Open

High

Low

Change %

Oct 19, 2012

1.0332

1.0374

1.0378

1.0318

-0.40%

Oct 18, 2012

1.0374

1.0377

1.0412

1.0356

-0.03%

Oct 17, 2012

1.0377

1.0307

1.0388

1.0299

0.68%

Oct 16, 2012

1.0307

1.0265

1.0314

1.0246

0.41%

Oct 15, 2012

1.0265

1.0223

1.0268

1.0203

0.41%

This week is a two-day meeting of the Federal Open Market Committee, which concludes Wednesday. Nomura analysts said considering that QE3 was announced in the September meeting, they now expect the FOMC to enter a holding pattern while watching for signs of a ‘substantial’ improvement in the labor market…. With the FOMC in wait-and-see mode, the ongoing discussion among participants around crafting a consensus forecast is likely to intensify, while other discussion may focus on what to do when Operation Twist ends in December.

FxEmpire provides in-depth analysis for each currency and commodity we review. Fundamental analysis is provided in three components. We provide a detailed monthly analysis and forecast at the beginning of each month. Then we provide more recent analysis and information in our weekly reports and we provide daily updates and outlooks.

Major Economic Events for the week of October 15-19, 2012 actual v. forecast for Yen, the Aussie, the Kiwi and USD

Date

Currency

Event

Actual

Forecast

Previous

Oct. 15

AUD

Home Loans (MoM) 

1.8%

1.4%

-0.7%

 

CNY

Chinese CPI (YoY) 

1.9%

1.9%

2.0%

 

CNY

Chinese PPI (YoY) 

-3.6%

-3.6%

-3.5%

 

CNY

Chinese CPI (MoM) 

0.3%

0.4%

0.6%

 

JPY

Industrial Production (MoM) 

-1.6%

-1.3%

-1.3%

 

USD

Core Retail Sales (MoM) 

1.1%

0.6%

1.0%

 

USD

Retail Sales (MoM) 

1.1%

0.8%

1.2%

 

USD

NY Empire State Manufacturing Index 

-6.2

-4.5

-10.4

 

NZD

CPI (QoQ) 

0.3%

0.6%

0.3%

 Oct. 16

USD

Core CPI (MoM) 

0.1%

0.2%

0.1%

 

USD

CPI (MoM) 

0.6%

0.5%

0.6%

 

USD

CPI (YoY) 

2.0%

1.9%

1.7%

 

USD

Core CPI (YoY) 

2.0%

2.0%

1.9%

 

USD

TIC Net Long-Term Transactions 

90.0B

45.3B

67.2B

 

USD

Industrial Production (MoM) 

0.4%

0.2%

-1.4%

 Oct. 17

USD

Building Permits 

0.894M

0.810M

0.801M

 

USD

Housing Starts 

0.872M

0.770M

0.758M

Oct. 18

AUD

NAB Quarterly Business Confidence 

-2.00

 

-2.00

 

CNY

Chinese Fixed Asset Investment (YoY) 

20.5%

20.2%

20.2%

 

CNY

Chinese GDP (YoY) 

7.4%

7.4%

7.6%

 

CNY

Chinese Industrial Production (YoY) 

9.2%

9.0%

8.9%

 

CNY

Chinese Retail Sales (YoY) 

14.2%

13.2%

13.2%

 

USD

Initial Jobless Claims 

388K

365K

342K

 

USD

Continuing Jobless Claims 

3252K

3275K

3281K

 

USD

Philadelphia Fed Manufacturing Index 

5.7

1.0

-1.9

Oct. 19 

USD

Existing Home Sales 

4.75M

4.75M

4.82M

Historical: From 2010 to present

Highest: 1.1080 USD on Jul 27, 2011

Average: 0.9898 USD over this period

Lowest: 0.8067 USD May 25, 2010

 

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

Date

Time

Currency

Event

Forecast

Previous

Oct. 24

01:30

AUD

CPI (QoQ) 

1.1%

0.5%

 

01:30

AUD

Trimmed Mean CPI (QoQ) 

0.6%

0.5%

 

02:45

CNY

Chinese HSBC Manufacturing PMI 

 

47.90

 

15:00

USD

New Home Sales

385K

373K

 

21:00

NZD

Interest Rate Decision 

2.50%

2.50%

Oct. 25 

22:45

NZD

Trade Balance 

-825M

-789M

Oct. 26 

00:30

JPY

Tokyo Core CPI (YoY) 

-0.5%

-0.4%

Government Bond Auction

Date Time Country 

Oct 22 09:10 Norway 

Oct 23 08:30 Spain 

Oct 23 14:30 UK 

Oct 23 17:00 US 

Oct 24 09:10 Sweden 

Oct 24 09:30 Germany 

Oct 24 14:30 Sweden 

Oct 24 15:30 Italy  

Oct 24 16:30 US 

Oct 25 00:30 Japan 

Oct 25 09:10 Sweden 

Oct 25 15:30 Italy  

Oct 25 17:00 US 

Oct 26 09:10 Italy

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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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