AUDUSD Forecast – Bolstered by Stronger Global Stock and Commodity Markets

The Australian Dollar is edging higher on Friday as a slight rebound in global equity markets boosted risk sentiment.  Gains are likely being capped, however, by uncertainty ahead of two key U.S. inflation reports and the U.S. Federal Reserve’s monetary policy and interest rate decisions on Dec. 14.

At 06:00 GMT, the AUDUSD is trading .6783, up 0.0013 or +0.20%. On Thursday, the Invesco CurrencyShares Australian Dollar Trust ETF (FXA) settled at $66.96, up 0.43 or +0.65%.

Traders are responding positively to a rebound in Asian shares and a rally in commodity prices as iron ore surged 4.5% to the highest level since June 16, and coking coal and rebar futures climbed more than 3%.

Investors will be shifting focus later today to the U.S. producer price inflation report, due to be released at 13:30 GMT. U.S. monthly consumer inflation data is due next week, along with the last policy decision this year from the Federal Reserve.

Futures market traders have priced in a near-certain possibility that the Fed will slow down its rate hike to 50 basis points next week, and expect the target U.S. federal funds rate would peak around 4.9% by next May.

Daily Swing Chart Technical Analysis

The main trend is up according to the daily swing chart. A trade through .6851 will signal a resumption of the uptrend. A move through .6669 will change the main trend to down.

The AUDUSD is also trading on the strong side of a long-term 50% level at .6760, making it support. This is followed by a short-term retracement zone at .6718 to .6687.

Daily Swing Chart Technical Forecast

Trader reaction to .6760 is likely to determine the direction of the AUDUSD on Friday.

Bullish Scenario

A sustained move over .6761 will indicate the presence of buyers. If this creates enough upside momentum then look for the rally to possibly extend into the main top at .6851. Taking out this level could trigger an acceleration into the Sept. 13 main top at .6916.

Bearish Scenario

A sustained move under .6760 will signal the presence of sellers. This could lead to a labored break into a pair of retracement levels at .6718 and .6687. Following this is the main bottom at .6669. Taking out this level will change the main trend to down.