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Forex - AUD/USD weekly outlook: April 23-27

ForexApr 22, 2012 09:58AM ET
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Investing.com - The Australian dollar ended the week little changed against its U.S. counterpart on Friday, as uncertainty over the ongoing debt crisis in the euro zone sapped demand for riskier assets.

AUD/USD hit 1.0304 on Tuesday, the weekly low; the pair subsequently consolidated at 1.0378 by close of trade on Friday, up just 0.06% on the week.

The pair is likely to find support at 1.0304, Tuesday’s low and resistance at 1.0451, the high of April 13.

Sentiment on the Aussie was hit on Tuesday after minutes of the Reserve Bank of Australia’s April 3 meeting indicated that policymakers may lower the benchmark interest rate in May if first quarter inflation stays low.

“Members had lowered their assessment of the pace of growth somewhat,” the minutes said. “If slower growth in demand could be expected to result in a more moderate inflation outcome, then a case could be made for further easing of monetary policy.”

The RBA left its benchmark interest rate unchanged at 4.25% in April.

Markets also remained jittery amid concerns that Spain will be the next country in the euro zone to require a bailout, as the government attempts to slash one of the largest deficits in the bloc, in the face of a looming recession.

An auction of 10-year Spanish government bonds on Thursday met with reasonably solid demand but saw the country’s borrowing costs push closer to the 6% level.

In the U.S., data on Thursday showed that manufacturing activity in the Philadelphia-region expanded at a slower rate than expected in April and U.S. existing home sales declined unexpectedly last month.

The data came after a government report showing that the number of people who filed for unemployment assistance in the U.S. in the week ending April 14 fell less-than-expected, while the previous week’s figure was revised higher.

The Department of Labor said the number of individuals filing for initial jobless benefits in the week ending April 14 fell by 2,000 to a seasonally adjusted 386,000, disappointing expectations for a decline of 18,000 to 370,000.

The previous week’s figure was revised up to 388,000 from 380,000.

The soft data sparked concerns over the strength of the U.S. economic recovery, ahead of the Federal Reserve’s two-day policy meeting this week.

Market sentiment improved ahead of the weekend after the Group of 20 leading economies agreed Friday to boost the International Monetary Fund’s lending capacity by USD430 billion, to help shield the global economy from the debt crisis roiling the euro zone.

In the week ahead, investors will be eyeing the Fed’s rate statement for any signs that the central bank is leaning towards another round of monetary easing. In addition, the U.S. is to release preliminary data on first quarter gross domestic product.

Meanwhile, Australia is to release what will be very highly anticipated data on first quarter inflation.

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

Monday, April 23

Australia is to release official data on producer price inflation, a leading indicator of consumer inflation.

Tuesday, April 24

Australia is to release official data on consumer price inflation, which accounts for a majority of overall inflation.

Meanwhile, the U.S. is to produce a report on house price inflation, a key indicator of the housing industry’s health, as well as a Conference Board report on consumer confidence and government data on new home sales.

Wednesday, April 25

Markets in Australia are to remain closed due to a national holiday.

The U.S. is to publish government data on durable goods orders, a leading indicator of production, and crude oil stockpiles. The Federal Reserve is to announce its benchmark interest rate and release its rate statement. Also Wednesday, U.S. Treasury Secretary Timothy Geithner is scheduled to speak.

Thursday, April 26

Australia is to release a report on its leading index, which is based on seven economic indicators and is designed to predict the future direction of the economy.

Later Thursday, the U.S. is to publish government data on initial unemployment claims, an important signal of overall economic health, as well as industry data on pending home sales.

Friday, April 27

The U.S. is to round up the week with preliminary data on first quarter GDP, the broadest measure of economic activity and the primary gauge of the economy’s health, as well as reports on the GDP price index and employment cost inflation. In addition, the University of Michigan is to release revised data on consumer sentiment.

Forex - AUD/USD weekly outlook: April 23-27

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