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AUDUSD pacing for a weekly gain, but outlook remains negative

H.S. Borji
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AUDUSD pacing for a weekly gain, but outlook remains negative

The Australian dollar was little changed against its US counterpart in Friday’s Asian session, as the markets consolidated ahead of a flurry of economic data from the United States.

The AUDUSD is pacing toward a weekly gain of 0.4 percent following three consecutive days of upward movement. However, the outlook remains negative as the pair failed to break above the 100-day simple moving average (0.9340).

The AUDUSD climbed 0.08 percent to 0.9322, a session high. The classic pivot point chart shows initial support is likely found at 0.9294, which is just below the 20-day exponential moving average. Initial resistance is likely found at 0.9336.

The Aussie edged higher against the Japanese yen, as the AUDJPY climbed 0.08 percent to 95.54. Initial support is likely found at 95.39, the 20-day exponential moving average, and resistance at 93.59.

The Australian dollar was little changed against the euro, as the AUDUSD dipped 0.03 percent to 1.4332. The pair faces initial support at 1.4325 and resistance at 1.4370.

The Aussie advanced 0.14 percent against the New Zealand dollar, sending the AUDNZD pair to 1.0988. Initial support is likely found at 1.0922 and resistance at 1.1016.

The Australian dollar has given up more than 100 pips against the greenback since July 1, but is still considered “stubbornly high” by the Reserve Bank of Australia. A stronger currency, it is feared, could stymie Australia’s growth efforts as the country grapples with rising unemployment, a broad slowdown in mining investment and a tougher budget.

The RBA has kept its cash rate at a record low of 2.5 percent for 12 consecutive months as policymakers seek a “period of stability” to promote economic growth.
Australia has no economic data to report on Friday, shifting the attention back on to the US dollar.

The US government will release several batches of economic data on Friday, including industrial production and producer inflation figures.

Industrial production is forecast to increase 0.3 percent in July, following a gain of 0.2 percent the previous month.

Meanwhile, producer prices are forecast to rise at an annual rate of 1.8 percent in July, following a 1.9 percent advance the previous month.

Separately, Reuters and the University of Michigan will co-release the monthly consumer sentiment index, which tracks consumer confidence in economic activity. Consumer sentiment is forecast to have edged up slightly this month, likely as a result of a stronger jobs market.

Earlier this week the Commerce Department said retail sales stagnated in July, a sign weak earnings growth was squeezing consumer spending at the start of the third quarter.

Retail sales, which represent a third of consumer spending, registered zero growth in July, following a 0.2 percent increase the previous month.

Feeble earnings growth has raised concerns about the sustainability of the US recovery. Thus far, greater job opportunities have failed to translate into higher incomes, which according to economists are needed to boost consumer spending.

According to economists, weak earnings are partly to blame for the broad slowdown in US housing activity. The other major factors weighing on the housing recovery include higher mortgage rates and rising house prices.

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