AUD to USD Weekly Forecast: Australian Dollar Eyes RBA, US Data for Direction

Economists forecast the Judo Bank Services PMI to increase from 52.5 to 53.0 in May. Furthermore, economists expect the Judo Bank Manufacturing PMI to fall from 49.7 to 49.0.

The Services PMI numbers will impact buyer demand for the Aussie dollar more. The services sector accounts for over 60% of the Australian economy, with the RBA aware of service sector contributions to headline inflation. Investors should consider the sub-components, including prices, employment, and new orders.

From elsewhere, economic data from China also needs consideration.

China Data and the PBoC in Focus

On Monday (June 17), retail sales, industrial production, fixed asset investment, and unemployment rate figures will influence near-term trends for the Aussie dollar.

Economists forecast industrial production and retail sales to increase 6.0% and 3.0% year-on-year in May, respectively. Industrial production and retail sales were up 6.7% and 2.3% in April, respectively.

Furthermore, economists expect the unemployment rate to remain steady at 5.0% and fixed asset investment to advance by 4.2% year-on-year.

Better-than-expected figures would influence buyer demand for the Aussie dollar.

Improving demand from China could boost the Australian economy and the Aussie dollar. China accounts for one-third of Australian exports. Australia has a trade-to-GDP ratio above 50%, with 20% of its workforce in trade-related jobs.

Beyond the numbers, investors should also consider PBoC policy decisions. On Monday, the PBoC will announce the 1-year MLF and set the 1-year and 5-year loan prime rates on Thursday. Economists expect the PBoC to stand pat. Surprise cuts to support growth could boost buyer appetite for the Aussie dollar.

Moreover, RBA staff considered the Chinese economy in its economic projections for 2024 and 2025. RBA Governor Michele Bullock could reference the stats during the Tuesday press conference.

US Economic Calendar: Retail Sales, Jobless Claims, Services PMI, and the Fed

On Monday, the manufacturing sector will be in focus. Economists forecast the NY Empire State Manufacturing Index to increase from -15.60 to -5.0 in June.

Better-than-expected numbers would support investor expectations of a soft US economic landing. However, the numbers will unlikely influence the Fed rate path. The manufacturing sector accounts for less than 30% of the US economy.

Retail sales figures will impact investor bets on a September Fed rate cut on Tuesday. Economists forecast retail sales to increase by 0.3% in May after stalling in April.

A larger-than-expected rise in retail sales could fuel demand-driven inflation and reduce bets on a Fed rate cut. A higher-for-longer Fed rate path could raise borrowing costs and reduce disposable income. Lower disposable income could force consumers to curb spending, dampening demand-driven inflation.

US jobless claims and Philly Fed Manufacturing Index figures also need consideration on Thursday. Economists forecast the Philly Fed Manufacturing Index to hold steady at 4.5.

Furthermore, economists expect initial jobless claims to fall from 242k to 240k in the week ending June 15. An unexpected increase could fuel investor expectations of a September Fed rate cut. Weaker labor market conditions could impact wage growth and reduce disposable income.

On Friday, preliminary private sector PMI numbers will draw investor attention. Economists forecast the S&P Global Services PMI to fall from 54.8 to 54.5 in June. Additionally, economists predict the S&P Global Manufacturing PMI to increase from 51.5 to 51.3.

The S&P Global Services PMI will likely influence the Fed rate path more. The services sector accounts for over 70% of the US economy and continues contributing to headline inflation.

FOMC Speakers in Focus

Beyond the numbers, investors should monitor FOMC Member speeches. FOMC members Austan Goolsbee (Tues) and Thomas Barkin (Thurs) are on the calendar to speak.

Views on the economy, inflation, and the Fed rate path need consideration.

Short-Term Forecast:

The near-term trend for the AUD/USD will hinge on the RBA press conference, US retail sales, private sector PMIs, and economic data from China. Upbeat US retail sales and Services PMI numbers could sink investor bets on a September rate cut and tilt monetary policy divergence toward the US dollar. However, a hawkish RBA could swing the markets in favor of the Aussie dollar.

AUD/USD Price Action

Daily Chart

The AUD/USD remained above the 50-day and 200-day EMAs, sending bullish price signals.

An Aussie dollar return to the $0.66500 handle could signal a move to the $0.67003 resistance level. Furthermore, a breakout from the $0.67003 resistance level could give the bulls a run at the $0.67500 handle.

The RBA press conference, US retail sales, and private sector PMIs need consideration.

Conversely, an AUD/USD fall through the 50-day EMA could give the bears a run at the 200-day EMA and the $0.65760 support level. A break below the $0.65760 support level would bring the $0.64582 support level into play.

With a 14-period Daily RSI reading of 48.86, the AUD/USD could drop below the $0.65760 support level before entering oversold territory.