AUD/USD Weekly Forecast: Firm Above 0.75 Ahead of RBA, Fed
- With the tightening cycle of central banks underway, attention now turns to the pace of easing.
- In Australia, the yield on the April 2024 bond surged above 0.70%.
- While the AUD/USD is still poised to advance in the long term, it may correct lower before regaining its former strength.
The AUD/USD weekly forecast remains bullish as the US dollar remained on the backfoot this week while Aussie enjoyed CPI-led gains.
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The AUD/USD exchange rate gained for a fifth consecutive week, reaching a three-month high of 0.7555, and is currently trading several pips below that mark. The pair peaked on Thursday following the publication of moderate US growth figures for the third quarter. The country grew at an annualized rate of 2%, up from 6.7% in the previous quarter.
Wall Street’s record rally boosted the Australian dollar as investors speculated that the Fed would be weary of throttling due to weak US economic performance. On Friday, the US released its annual core consumer spending index, which remained stable at 3.6% in September. A stable level of PCE inflation relieves pressure on policymakers by measuring price pressures as the Fed prefers.
A US Federal Reserve monetary policy meeting will be held next week, and the results will be released on November 3. The minutes of the September meeting of Chief Jerome Powell indicated that the central bank would likely first cut $10 billion a month in government bonds and $5 billion a month in mortgage-backed securities.
The RBA-adjusted median CPI jumped to 2.1% in the year’s third quarter from 1.6% in the previous quarter. However, despite the Reserve Bank of Australia’s confirmation that rates will not change until at least 2024, market participants immediately rushed to speculation about a rate hike.
Additionally, retail sales in Australia increased 1.3% in September, much better than the 0.2% expected. As a result, the third-quarter PPI came in at 2.9%, below the expected 3.2% but better than the previous quarter’s 2.2%.
Key events/data for AUD/USD next week
The NBS PMIs for October will be released by China next week. It is expected that the manufacturing index will be 52.9 while the services index will be 49.7. In addition, Australia will publish the official AIG Manufacturing Index for September, which was previously 51.6.
The TD Securities inflation report for October will be released on Tuesday, and the RBA will announce its monetary policy decision. Political leaders are expected to formally lift the yield curve control regime after the central bank refused to defend its 0.1% target for bonds in April 2024 as they rose above 0.7%. In recent days, short-term bond yields have skyrocketed worldwide, while long-term bond yields have fallen, causing investors to worry.
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After the FRS meeting, the official ISM PMIs will be presented on the US calendar: the industrial index is expected at 60.4, and the services index is expected at 61.5, slightly below their September levels. In addition, the country is to publish an ADP survey on private-sector job creation on Wednesday, and by the end of the week, the country is to publish its October report on off-farm wages. After hitting 194,000 headlines in September, the country is forecast to create 385,000 new jobs, and the unemployment rate is expected to remain unchanged at 4.8%.
AUD/USD weekly technical forecast: Looking to break 200-DMA
The AUD/USD price remains capped by the 200-day SMA and the swing highs around 0.7550s. However, we have a bullish crossover between 20-day and 100-day SMAs, which may lend some support for the time being. Hence, the volume is bullish biased on the daily chart. However, any further rally will find resistance around recent swing highs at 0.7560 ahead of 0.7600. On the flip side, 0.7480 can be a strong support zone ahead of 0.7430.