The Australian dollar managed to recover mostly thanks to hopes that the Trump tariffs are not so bad and despite not-so-great Australian data. Can it continue higher? Speeches by RBA members and an important Chinese figure stand out. Here are the highlights of the week and an updated technical analysis for AUD/USD.
The Australian economy grew by only 0.4% in Q4 2017, worse than had been expected, but the RBA expects stronger GDP numbers in 2018. Other figures were mixed: building approvals increased by a whopping 17.1% while retail sales disappointed with a rise of only 0.1%. In the US, Trump eventually signed off the tariffs and lost his top economic advisor Gary Cohn. However, the exemptions that Canada and Mexico received open the door to a further watering down of the duties and allowed the Aussie to recover on a risk-rally. In addition, the hopes for peace in the Korean peninsula also improved the sentiment and gave a boost to the A$.
AUD/USD daily graph with support and resistance lines on it. Click to enlarge:
*All times are GMT
AUD/USD Technical Analysis
Aussie/USD kicked off the week by emerging from the lows and topping the 0.7760 level (mentioned last week). It managed to close the week above 0.78.
Technical lines from top to bottom:
0.8130 was the high point in 2017 and was challenged early in the year. 0.8050 capped the pair in August and also temporarily in January, on its way up.
0.7990 was the high point in February and protects the 0.80 level. 0.7890 worked as support in February and resistance in October.
0.7760 was the low point in mid-February and works as support. The round level of 0.77 was resistance in December.
Lower, 0.7650 worked as resistance in several occasions in late 2017. The last line to watch is the round 0.75 level.
I remain bearish on AUD/USD
The tariff story is from over and RBA officials may try to push down the currency. Hosuehold debt and wages remain issues for Australia.
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