AUD/USD Forecast July 5-12 – Aussie Closing In On 70, RBA Decision Ahead

AUD/USD showed strength last week, gaining 1.1 percent. The upcoming week has seven events. Here is an outlook at the highlights and an updated technical analysis for AUD/USD. (FXA)

There was positive news from Australia’s manufacturing sector, as the AIG Manufacturing Index improved to 51.5 in June. This marked its first reading in expansion territory since March. The 50-level separates contraction from expansion. Australia’s trade surplus narrowed to A$8.03 billion, down from A$8.80 billion a month earlier. Consumer spending has jumped, as retail sales climbed 16.9% in May. This follows a gain of 16.3% in June.

In the U.S., manufacturing improved sharply, as Manufacturing PMI climbed from 39.8 to 49.6 points. The estimate stood at 50.0, which separates contraction from expansion. Durable goods orders sparkled in May. The headline figure climbed 4.0%, rebounding after a decline of 7.4 percent. The core reading surged 15.8%, rebounding from a read of -17.2% beforehand. The Conference Board consumer confidence index jumped from 85.9 to 98.1 and easily beat the estimate of 91.6 points. Nonfarm payrolls shot up in June, with a gain of 4.80 million. This comes after a May release of 2.509 million. Unemployment claims dropped from 1.48 million to 1.42 million, higher than the estimate of 1.35 million.

AUD/USD daily chart with support and resistance lines on it

  1. MI Inflation Gauge: Monday, 1:00. The Melbourne Institute inflation gauge provides a monthly look at inflation. The index declined by 1.2% in May, as inflation remains at weak levels. We now await the June data.
  2. AIG Services Index: Monday, 22:30. The services sector continues to show significant contraction. The index came in at 31.6 points in May, up from 27.1 beforehand. Will the upswing continue in June?
  3. RBA Rate Decision: Tuesday, 4:30. The RBA is expected to maintain the cash rate at 0.25%, where it has been pegged since March. Investors will be carefully combing the rate statement, looking for clues as to future monetary moves. With AUD/USD soaring 12% in Q2, policymakers will have to give some thought to raising rates to keep a lid on the value of the Aussie..
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