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

Published 05/18/2014, 08:20 AM
AUD/USD ends the week with a modest gain of 0.02%

Investing.com - The Australian dollar eased up modestly against its U.S. counterpart on Friday, as market players weighed a mixed bag of U.S. data on housing starts and consumer sentiment.

AUD/USD hit 0.9408 on Wednesday, the pair’s highest since April 15, before subsequently consolidating at 0.9365 by close of trade on Friday, up 0.1% for the day and 0.02% higher for the week.

The pair is likely to find support at 0.9326, the low from May 15 and resistance at 0.9408, the high from May 14.

The Commerce Department reported Friday that U.S. housing starts rose 13.2% in April, after a 2.0% increase in March. It was the largest increase in five months, indicating that the economy is shaking off the effect of a weather-related slowdown over the winter.

But the upbeat housing data was overshadowed by a report showing that consumer confidence in the U.S. deteriorated this month. The University of Michigan's consumer sentiment index dropped to 81.8 in May, from 84.1 in April. Analysts had expected a slight uptick to 84.5.

Meanwhile, in Australia, the nation’s Treasury said, in its annual budget report released Tuesday, that the government aims to nearly halve its budget deficit over the next year through a combination of spending cuts and tax increases.

According to the report, the deficit is forecast to fall from A$50 billion to A$30 billion, while the spending cuts however are expected to lead to thousands of job losses.

The budget report also mentioned the government's plans to spend as much as A$11 billion on key infrastructure projects such as roads, railways and a new airport in Sydney.

Data from the Commodities Futures Trading Commission released Friday showed that speculators increased their bullish bets on the Australian dollar in the week ending May 13.

Net longs totaled 17,127 contracts, compared to net longs of 8,637 in the preceding week.

In the week ahead, investors will be looking ahead to the release of the minutes from both the Reserve Bank of Australia’s and the Federal Reserve's most recent monetary policy meeting.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Monday, as there are no relevant events on this day.

Tuesday, May 20

The Reserve Bank of Australia is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective.

In the U.S., Federal Reserve Bank of Philadelphia Charles Plosser and Federal Reserve Bank of New York President William Dudley are to speak.

Wednesday, May 21

Australia is to publish data on the wage price index and a private sector report on consumer sentiment.

Fed Chair Janet Yellen is to speak at an event in New York. Later Wednesday, the Fed is to publish the minutes of its latest meeting.

Thursday, May 22

China is to publish the preliminary reading of the HSCB manufacturing index. The Asian nation is Australia’s largest trade partner.

Australia is to produce data on inflation expectations.

The U.S. is to release its weekly report on initial jobless claims and private sector data on existing home sales.

Friday, May 23

The U.S. is to round up the week with data on new homes sales.

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