AUD/USD Forecast Jan. 7-11 – Aussie Jumps As Powell Preaches Caution

The Australian dollar started 2019 with a winning week, thanks to strong gains of 1.5% on Friday. The key event in the upcoming week is retail sales, the primary gauge of consumer spending. Here is an outlook for the highlights of this week and an updated technical analysis for AUD/USD.

Risk appetite improved after Fed Chair Jerome Powell sought to reassure the financial markets with regard to rate policy. Powell said he was aware of the risks of a slowdown in the U.S. economy and that the Fed would be patient in its policy decisions. The comments helped boost the Aussie last week, after sustaining losses of 4.5% in December.

AUD/USD daily graph with support and resistance lines on it. Click to enlarge:

  1. AIG Manufacturing Index: Sunday, 21:30. The manufacturing sector suffered a sharp drop in November, as the reading of 51.3 pointed to stagnation in the industry. Will we see a rebound in December?
  2. Trade Balance: Tuesday, 00:30. Australia continues to post trade surpluses, but dipped in October to A$2.32 billion. The downturn is expected to continue in November, with an estimate of A$2.18 billion.
  3. ANZ Job Advertisements: Tuesday, 00:30. This minor indicator has posted three declines in the past four months, with a reading of -0.3% in November.
  4. AIG Services Index: Tuesday, 21.:30. The indicator climbed to 55.1 in November, pointing to strong expansion. This was the highest level since June.
  5. Building Approvals: Wednesday, 00.:30. This key indicator has posted three declines in the past four months. Another decline is expected in November, with an estimate of -0.3%.
  6. AIG Construction Index: Wednesday, 21.:30. This minor indicator has dropped for four straight months, and is well below the 50-level, which separates contraction and expansion.
  7. Retail Sales: Friday, 00.:30. The week winds up with this key event, which should be treated as a market-mover. Retail sales gained 0.3% in October, and an identical gain is expected in the November release.
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