AUD/USD Weekly Forecast: Bears To Extend Losses To 0.72 Before FOMC

  • The AUD/USD pair opened the week at 0.7349, and the pair kept on falling the whole week despite mixed US economic data.
  • The AUD/USD pair is particularly susceptible to changes in the risk environment and Chinese factors.
  • A tapering announcement is likely at the Federal Reserve’s meeting on Wednesday, even if no specific date is set.

Australian, Dollar, Money, Currency

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The weekly forecast for the AUD/USD pair is bearish as the price pierced key support of 0.7300 level after the Greenback pumped up amid upbeat US retail sales (FXA, USD).

The AUD/USD pair opened the week at 0.7349, and the pair kept on falling the whole week despite mixed US economic data. The Aussie closed the week at lows around 0.7260, with a negative change of 90 pips.

In August, China’s economy was in trouble as retail and industrial production fell short of expectations, and closures and restrictions in multiple locations have appalled Australia.

As many Chinese companies seek to profit in Beijing and real estate developer Evergrande might default, the risks for China and thus Australia, the largest raw materials supplier for China, have increased.

The AUD/USD pair is particularly susceptible to changes in the risk environment. For example, the uncertainty surrounding China, the world’s second-largest economy, plays an important role in the US dollar’s safe-haven status.

Fed policy remained ambiguous after US economic data. For example, retail sales were higher than expected in August, but consumer inflation was slightly lower.

According to the Federal Reserve, a tapering announcement is likely at the Federal Reserve’s meeting on Wednesday, even if no specific date is set. But, likely, a taper schedule will also be announced during the meeting, so markets are likely to remain quiet until then.

What’s Next For The AUD/USD Weekly Forecast?

The only significant release in Australia is the Commonwealth Bank Purchasing Managers’ Index for September. It won’t affect the market, though.

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