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AUD/USD Weekly Fundamental Analysis, November 9 – November 13, 2015 Forecast

By:
James Hyerczyk
Updated: Nov 7, 2015, 12:13 UTC

Weekly Analysis and Recommendation:  The AUD/USD finished lower for the fourth consecutive week. The Forex pair ended the week under pressure at .7043,

AUD/USD Weekly Fundamental Analysis, November 9 – November 13, 2015 Forecast

AUDUSD
Weekly Analysis and Recommendation: 

The AUD/USD finished lower for the fourth consecutive week. The Forex pair ended the week under pressure at .7043, down .0091, or 1.28%.

The Aussie strengthened against the U.S. Dollar early in the week. The catalysts behind the move was the Reserve Bank of Australia’s decision to keep its policy rate unchanged at 2% despite falling inflation rates.

The RBA reiterated that its monetary policy needs to be accommodating. The central bank also said that “the Australian dollar is adjusting to the significant declines in key commodity prices” and “business surveys suggest a gradual improvement in conditions over the past year.”

The RBA started its easing cycle because it thought the Aussie was too strong, hurting Australian exports. Last week’s monetary policy statement indicates that the RBA is counting on the U.S. Federal Reserve to keep the pressure on the Australian Dollar.

This was confirmed when the RBA stated, “The Federal Reserve is expected to start increasing its policy rate over the period ahead”. This statement suggested the RBA wants the Fed to do its dirty work.

At mid-week, the rally had run out of steam as investors turned their focus on the U.S. jobs report. The sell-off was helped by comments from Australia’s central bank Governor Glenn Stevens, who said  accommodative monetary policy is likely to be appropriate “for some time yet”, while adding the macroeconomic impact of recent mortgage rate increases by major banks “may not be large.”

“It seems likely that an accommodative stance will be appropriate for some time yet,” Stevens said in the address Thursday. “Were a change to monetary policy to be required in the near term, it would almost certainly be an easing, not a tightening. Certainly the rate of CPI inflation wouldn’t be an impediment to that if we thought it was useful to do it. “

Traders interpreted Stevens’ speech to mean the RBA is likely to cut interest rates two times within the next year. Traders are pricing in a 25 percent chance of a rate cut in December, rising to a more than 60 percent chance in February.

The dovish comments from Stevens coupled with the stronger-than-expected U.S. Non-Farm Payrolls report on November 6, triggered an even steeper break. The U.S. Non-Farm Payrolls report for October showed the addition of 271,000 jobs, soundly beating estimates of about 179,000. The unemployment rate ticked lower to 5 percent, marking full-employment. Average hourly earnings increased 9 cents or 0.4%, for an annualized increase of 2.5 percent. This put it slightly above the Fed’s mandated inflation target of 2.0 percent. 

China could rattle the markets early in the week when it opens with fresh CPI data. Over the week-end, it is scheduled to release trade data. At the end of the week, it will publish retail sales info. Traders want to see signs that the Chinese economy is stabilizes after several months of economic turmoil. 

With the jobs report out of the way, the focus will shift towards the consumer. Friday’s retail sales report will be most important. Core retail sales are expected to recover from the previous reports -0.3%. Traders expect it to rise 0.4%. Retail Sales are estimated to show a 0.3% gain versus the previously reported 0.1%. 

Softer-than-expected retail sales figures will not necessarily take a December rate cut off the board, but it could give short-sellers a chance to lighten up positions, perhaps triggering a modest short-covering rally by the Aussie. 

Other important U.S. reports this week include JOLTS Job Openings on Thursday and Consumer Sentiment of Friday. 

Several Fed members are scheduled to speak next week, including William Dudley, James Bullard and Jeffrey Lacker, but the primary emphasis will be on Fed Chair Janet Yellen who is scheduled to give welcoming remarks at a Fed conference on Thursday. 

Forecast 

The downside momentum on the close on Friday suggests there will be follow-through selling to start the week, however, the AUD/USD is also ripe for periodic profit-taking and short-covering rallies due to technically oversold conditions and general nervousness ahead of Friday’s retail sales report.

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. 

Weekly AUD/USD
Weekly AUD/USD

Important Reports to Watch this Week

        Date                 Time         Curr                                               Event                                                             Forecast Previous                                               

Sun Nov 8

7:30pm ET

AUD

 

ANZ Job Advertisements m/m

     

3.9%

 

Mon Nov 9

7:30pm ET

AUD

 

NAB Business Confidence

     

5

 
   

AUD

 

Home Loans m/m

   

0.1%

2.9%

 

Tue Nov 10

8:30am ET

USD

 

Import Prices m/m

   

0.0%

-0.1%

 
 

10th-13th

USD

 

Mortgage Delinquencies

     

5.30%

 
 

6:30pm ET

AUD

 

Westpac Consumer Sentiment

     

4.2%

 

Wed Nov 11

7:00pm ET

AUD

 

MI Inflation Expectations

     

3.5%

 
 

7:30pm ET

AUD

 

Employment Change

   

15.2K

-5.1K

 
   

AUD

 

Unemployment Rate

   

6.2%

6.2%

 

Thu Nov 12

8:30am ET

USD

 

Unemployment Claims

     

276K

 
 

10:00am ET

USD

 

JOLTS Job Openings

     

5.37M

 
 

10:15am ET

USD

 

FOMC Member Evans Speaks

         
 

11:00am ET

USD

 

Crude Oil Inventories

     

2.8M

 
 

12:15pm ET

USD

 

FOMC Member Dudley Speaks

         

Fri Nov 13

8:30am ET

USD

 

Core Retail Sales m/m

   

0.4%

-0.3%

 
   

USD

 

PPI m/m

   

0.1%

-0.5%

 
   

USD

 

Retail Sales m/m

   

0.3%

0.1%

 
   

USD

 

Core PPI m/m

   

0.2%

-0.3%

 
 

10:00am ET

USD

 

Preliminary University of Michigan Consumer Sentiment

   

91.2

90.0

 

About the Author

James is a Florida-based technical analyst, market researcher, educator and trader with 35+ years of experience. He is an expert in the area of patterns, price and time analysis as it applies to futures, Forex, and stocks.

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