Forex - AUD/USD weekly outlook: January 19 - 23

Investing.com - The Australian dollar edged higher against its U.S. counterpart on Friday, as investors digested a mixed bag of U.S. data.

AUD/USD rose to 0.8294 on Thursday, the pair's highest since December 12, before subsequently consolidating at 0.8228 by close of trade on Friday, up 0.18% for the day and 0.31% higher for the week.

The pair is likely to find support at 0.8067, the low from January 14, and resistance at 0.8294, the high from January 15.

In a preliminary report, the University of Michigan said Friday that its consumer sentiment index rose to 98.2 this month, the highest level since January 2004, from 93.6 in December, compared to expectations for a rise to 94.1.

However, a separate report showed that U.S. consumer price inflation fell 0.4% last month, in line with expectations and after a 0.3% decline in November.

Core CPI, which excludes food and energy, was flat in December, compared to expectations for a 0.1% rise, after a 0.1% uptick the previous month.

Muted inflation may prompt the Federal Reserve to delay any increases in interest rates to late-2015 from mid-2015.

Also Friday, data showed that U.S. industrial production slipped 0.1% in December, confounding expectations for a 0.1% rise, after an increase of 1.3% in November.

The Aussie was also boosted by the release of strong domestic employment data on Thursday.

The Australian Bureau of Statistics said that the number of employed people increased by 37,400 last month, beating expectations for a 3,800 rise, while the unemployment rate ticked down to 6.1% from 6.2% in November. Analysts had expected the unemployment rate to sit at 6.3% last month.

Elsewhere, AUD/CHF was up 2.61% to 0.7072 late Friday, having recovered from the lows of 0.6072 struck in the previous session.

The franc still ended the week with gains of 15% against the Australian dollar after the Swiss National Bank said Thursday that it would discontinue its minimum exchange rate of 1.20 per euro, while lowering interest rates further into negative territory.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.57% to 93.05 and notched up its fifth successive week of gains, supported by weakness in the euro.

The euro remained under pressure amid mounting expectations that the European Central Bank will embark on full blown quantitative easing as soon as its next policy meeting on January 22.

In the week ahead, investors will be focusing on Thursday’s outcome of the ECB’s policy meeting and the subsequent press conference with central bank governor Mario Draghi.

Traders are also looking ahead to a raft of Chinese economic data later this week, including reports on fourth quarter gross domestic product, as well as data on industrial production and retail sales.

The Asian nation is Australia's largest trade partner.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, January 19

U.S. markets will remain closed for the Martin Luther King Day holiday.

Tuesday, January 20

China is to release data on gross domestic product, the broadest indicator of economic activity and the leading indicator of economic growth. The country is also to report on fixed asset investment, industrial production and retail sales.

Wednesday, January 21

Australia is to release private sector data on consumer sentiment.

The U.S. is to release data on building permits and housing starts.

Thursday, January 22

The U.S. is to release data on initial jobless claims.

Friday, January 23

China is to publish the preliminary reading of its HSBC manufacturing index.

The U.S. is to round up the week with preliminary data on manufacturing activity and a private sector report on existing home sales.