AUD/USD Weekly Forecast – 24 July

Friday, Jul 21 2017

Events that marked the week:

There were no data releases from Australia on Monday, but from China GDP and Industrial Production figures were released. China’s economy expanded faster than expected in the second quarter, as traditional growth sectors continued to underpin the economy. The National Bureau of Statistics said gross domestic product (GDP) expanded at an annualized 6.9% in the second quarter, unchanged from the previous quarter and well within the government’s target range of 6.5% to 7%. Analysts in a median forecast called for quarterly growth of 6.8%. Compared to Q1, GDP expanded 1.7%, official data showed.

The National Bureau of Statistics released a barrage of other data on Monday that pointed to faster expansion at the tail end of the second quarter. Retail sales, which measure private and government spending, rose 11% annually last month. That was a notable improvement from May’s 10.7% growth rate. Industrial production, the broadest measure of factory output, expanded 7.6% in the 12 months through June. That was well above the previous month’s 6.5% growth pace. Meanwhile, annual fixed-asset investment – a proxy for long-term spending – 8.6% in the six months through June.

From Australia, on Tuesday, RBA Meeting Minutes were released. The RBA minutes revealed that the policymakers remain upbeat on the economy, and markets believe that the next policy move could be very well a rate hike. This boosted the Aussie across the board, sending the core pair more than 1 big figure higher through the key upside barrier located at 0.7850 levels, only to proceed its course higher towards 0.79 handle.

The rebound in the Aussie can be also attributed to broad based US dollar weakness, after the Senate Republicans rejected Trump’s Healthcare bill yet again. The USD index slumps -0.38% to trade near fresh 10-month lows of 94.53. Markets now await fresh fundamental catalysts for further momentum on the pair. In the meantime, the USD dynamics and hawkish RBA minutes could continue to underpin the sentiment around the AUD/USD pair.

Thursday's session brought Australian job figures. In seasonally adjusted terms employment increased 14,000 to 12,166,900. Full-time employment increased 62,000 to 8,356,000 and part-time employment decreased 48,000 to 3,810,800. Unemployment increased 13,100 to 728,100. The number of unemployed persons looking for full-time work increased 9,200 to 500,600 and the number of unemployed persons only looking for part-time work increased 3,900 to 227,500. Unemployment rate remained steady at 5.6%, following a revised May 2017 estimate.

This week markets will be looking at:

CPI (Wednesday 3:30)

PPI (Friday 3:30)

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