Forex Market: Outlook for AUD/USD during the upcoming week

Australian dollar traded little changed against its US counterpart during the late phase of US session on Friday, as concerns that Chinese economy was slowing down and Crimea tensions urged market players to reduce their possessions of high-yielding assets, while the gauge of consumer confidence by Thomson Reuters and the University of Michigan regarding the United States decreased in March.

AUD/USD touched a daily high at 0.9050 at 14:12 GMT, after which the pair closed at 0.9032 on Friday, gaining a mere 0.01% for the day. However, AUD/USD registered a weekly loss of 0.42%. Support was likely to be received at March 12th low, 0.8924, while resistance was to be encountered at March 13th high, 0.9104.

The parliament of Crimea voted that the Black Sea peninsula will declare itself an independent state, if its residents approve a March 16th referendum on splitting from Ukraine and joining the Russian Federation.

US President Barack Obama and German Chancellor Angela Merkel have stated the vote has no international legitimacy and warned Russia to retreat from plans to annex Crimea, with Merkel even threatening “massive” political and economic sanctions.

In addition, Goldman Sachs Group Inc. revised down its forecast for the exchange rate of the Aussie, citing the currency’s weakening trend as one of institution’s “strongest conviction views” during the next 3 to 6 months. The 12-month forecast for the AUD/USD has been revised to 0.8000 from 0.8500.

In China, the National Bureau of Statistics revealed that country’s industrial production rose 8.6% in February compared to a year ago, or below preliminary estimates pointing to a 9.5% gain.

Chinese retail sales climbed at an annualized rate of 11.8% in February, while the median estimate of experts pointed to an increase by 13.5%.

The Aussie tends to be sensitive to data coming out of China, as the latter is Australia’s largest export partner.

Meanwhile, according to data by Thomson Reuters and the University of Michigan, the preliminary reading of their index of consumer confidence for the United States slowed down to 79.9 this month, which has been the lowest level since November. The final reading for February was 81.6, while experts had anticipated that the index will advance to 82.0 in March.

During the week ahead investors attention will be focused on the outcome of Federal Reserve Banks meeting on monetary policy, scheduled for March 18th-19th.

AUD/USD may be influenced by a number of reports/events, which are expected during the next week as follows:

On Monday (March 17th) Australia is to release a report on new auto sales during February, an indicator providing clues over the tendency in consumer confidence.

At 12:30 GMT the Federal Reserve will announce the results of its March survey, encompassing manufacturers in the area of New York. This data will be followed by a report on industrial production in the United States in February.

On Tuesday (March 18th) the Reserve Bank of Australia is expected to publish the minutes of its most recent meeting on policy, which usually comes out two weeks after the meeting itself.

At 12:30 GMT the United States will release a report regarding consumer price inflation in February, which will be accompanied by data on housing starts and building permits during the same month.

On Wednesday (March 19th) the United States is expected to release data regarding its current account during the last quarter of 2013.

At 18:00 GMT the Federal Open Market Committee will announce its decision on interest rates and the monthly size of monetary stimulus, followed by a statement by Fed Chair Janet Yellen.

On Thursday (March 20th) the Reserve Bank of Australia is to publish its statement on monetary policy, which includes banks assessment of economic conditions and inflation rate in the country.

The United States is to publish its weekly report on the number of initial jobless claims during the week ended on March 15th.

The National Association of Realtors (NAR) will present data regarding sales of existing single-family homes in the country during February.

At 14:00 GMT the Federal Reserve will announce the results of its monthly business survey, encompassing manufacturers in the region of Philadelphia.

On Friday (March 21st) the Conference Board research group is to report on its leading index for Australia in January, an indicator used as a basis for nations economic growth forecasts in a short and an intermediate term.