AUD/USD Forecast January 20, 2012, Technical Analysis

AUD/USD initially dipped for the Thursday session as the Aussie sold off on poor job numbers out of that country. However, as the session continued, the “risk on” trade kicked into gear, and the Aussie always gets bought when that happens. This produced a bounce and formed a hammer at this important area. The 1.04 level is one we have been watching as a potential breakout point, and we continue to do so. This hammer would be confirmed if we break higher, but if we break lower this would be a massively bearish sign. We are simply waiting to see which side of this hammer that the market closes on in the daily time frame, and trading with that direction.

AUD/USD Forecast January 20, 2012, Technical Analysis
AUD/USD Forecast January 20, 2012, Technical Analysis

Markets Filled with Optimism after Upbeat U.S Jobless Claims

Markets faced a cheerful trading after the upbeat jobless claims, as the number of Americans filing for unemployment insurances dropped by 50 thousand to 352 thousand last week, from a revised 402 thousand, the lowest in almost four year and beating analysts’ median estimates of 384 thousand. noting that markets were filled with optimism after the Spanish and French auction which came better than they targeted, .

The sentiment improved in the market today after the Spanish and French bond auctions, as Spain sold 3.009 billion Euros of 5.85% 2022 bonds, on an average yield of 5.403%, compared with the previous of 6.975% recorded in the November auction. Demand for these bonds was 2.17 times the quantity offered compared with 1.54 times an auction earlier.

In Europe, CAC 40 jumped 1.96%, while DAX inclined by 0.97%, while in US, Dow Jones rose nearly 0.25%, S&P 500 inclined by 0.49%, and NASDAQ rose by 0.80%.

In Currencies market, the euro inclined against USD trading around $1.2923 compared with opening levels at $1.2862, as demand for higher yielding assets increased somehow, while the pound rose trading at $1.5473.

The USD lost the momentum today trading around the 80.23 level, while the USD/YEN pair inclined to trade at 77.20. The AUD/USD pair declined trading around the 1.0404, where gold dropped trading around $1652.95, and oil declined also trading at $100.75.

AUD/USD Forecast Jan. 20, 2012, Fundamental Analysis

AUD/USD Forecast Jan. 20, 2012, Fundamental Analysis
AUD/USD Forecast Jan. 20, 2012, Fundamental Analysis
The AUD/USD pair retreated for the first time in three days, after the Australian employer unexpectedly cut jobs in December, which dragged the down despite the current dollar weakness.

The Australian dollar was not able to benefit from the current rally in the Asian stocks in addition to the market sentiment which supported the risk appetite due to the latest signs of recovery from the U.S. economy.

Australian employers have cut jobs during December by 29.3 thousand, which ended the three days rally for the Aussie against the dollar, while the US dollar continued its weakness against other majors as risk appetite continued in the global market supported by the rally in stocks.

On Friday at 00:30 GMT, the Australian economy will release the Import Price Index for the fourth quarter, where its expected to come at 0.6% higher than the prior reading of 0.0%.

The Export Price Index for fourth quarter is expected at the same time, with a previous reading of 4.0% and it’s expected to come at –2.0%.

The U.S. economy will issue the Existing Home Sales for December, where it’s expected with 3.7% rise to 4.65 million from 4.42 million.

Euro advances on IMF and Greece, ahead of France’s and Spain’s bond auctions

Markets are rising quietly ahead of the France’s and Spain’s bond auctions on hopes Greece will soon reach an agreement with bondholders while the International Monetary Fund considers expanding its lending resources to help the euro-zone countries fight the debt crisis.

The IMF is seeking to expand its lending resources by $500 billion yet the U.S. and other countries rejected the idea, considering that the Europe must solve this problem with its own money. Meanwhile Greece might reach an agreement with bondholders over the size of the losses to avoid a messy default.

The upbeat earnings report from Goldman Sachs and EBay helped keep sentiment positive, while earnings from Bank of America, Morgan Stanly, Google, Microsoft and Intel will keep investors cautious, especially after the New York based Kodak filed for bankruptcy as consumers turned from film to digital technology.

Asian stocks advance today on IMF and China, as world’s 2nd largest economy considers easing the capital requirements and is letting its five biggest banks boost lending to avoid hard landing risks. Nikkei 225 rose 1.04% yet the S&P/ASX 200 fell 0.07% after Australia’s employment unexpectedly fell in Dec.

In Europe shares advanced on Greece and IMF hopes ahead of the France’s and Spain’s long-dated bond auctions. Portugal’s yields fell yesterday after a successful auction easing some of the worries ignited since S&P’s mass debt rating cuts in Europe. DAX rose 0.04% while CAC 40 gained 0.49%.

Today the ECB will release its monthly report, while the US will be releasing its CPI index, the housing starts and building permits data along with the weekly jobless claims, Philly index and EIA crude oil inventories. In Europe, France will sell 9.5 billion euros of debt while Spain will sell 4.5 billion euros of bonds.

The euro is seeing some gains trading around 1.2888 while the pound is trading with a slight upside momentum around 1.5437. The dollar index is slightly falling trading around 80.36, while the yen is strengthening trading around 76.70. The AUD is weakening following the jobs data trading around 1.0395.

As the US dollar lost its appeal commodities found support for another day where crude is trading with gains around $101.65 compared with the lowest at $101.01 while gold is around $1665.20 from the lowest at $1655.80 as eyes are on Europe.

AUD/USD Forecast January 19, 2012, Technical Analysis

AUD/USD broke out on Wednesday from a triangle that had kept it under pressure for the last month or so. The solid close at the end of the session foretells higher prices, and the market looks set to continue the rise as we are breaking the very last bits of resistance at the close. The close of the candle is solid, and the top of the range is where we stand.

The 1.04 level was significant resistance, and it appears that the level should be supportive going forward as well. The triangle that was just broken actually measures all the way up to 1.12, and because of this – we have become “buyers only” of this pair as of today. On a pullback and support at 1.04, we are buying. On a break of the Wednesday high, we are buying. Selling cannot be done as long as we stay above the 1.04 level mentioned above.

AUD/USD Forecast January 19, 2012, Technical Analysis
AUD/USD Forecast January 19, 2012, Technical Analysis

AUD/USD Fundamental Analysis January 20, 2012 Forecast

Close of Asian Markets

Economic Events: (GMT)

13:30 USD Initial Jobless Claims 385.00K 399.00K

13:30 USD Continuing Jobless Claims  3590.00K 3628.00K

Initial Jobless Claims measures the number of individuals who filed for unemployment insurance for the first time during the past week. This is the earliest U.S. economic data, but the market impact varies from week to week.

Continuing Jobless Claims measures the number of unemployed individuals who qualify for benefits under unemployment insurance.

A higher than expected reading should be taken as negative/bearish for the USD, while a lower than expected reading should be taken as positive/bullish for the USD.  If the report comes in under the 385K we can expect to see the USD fall against the AUD, but if the report is at the 399K level or above expect to see the USD rally and trend upwards on solid economic news.

00:30 AUD Import Price Index (QoQ) 0.60% 0.00%

The Import Price Index measures the change in the price of imported goods and services purchased domestically.

A higher than expected reading should be taken as positive/bullish for the AUD, while a lower than expected reading should be taken as negative/bearish for the AUD.

 Analysis and Recommendation:

 Support and Resistance can be found at these levels   
S:            1.0293   1.0326   1.0371  
P:            1.0404 
R:            1.0449   1.0482   1.0527

AUD/USD was trading at 1.0393

The AUD fell against the USD on bad unemployment numbers just out.

AUD/USD dropped to 1.0400 during Asian session, falling 0.33% and recovering from a low of 1.0377.
The duo was likely to find support 1.0326, and resistance at 1.0449,.

The Ozzie government data showed the economy lost 29,300 jobs in December, much worse than expected as the forecast called for the addition of 10,000 jobs.

The data sent the ANZ crashing as traders saw the weak jobs data, coupled with expectations that inflation data could be soft as well, promoted the predictions that the Reserve Bank of Australia will cut interest rates at its next monetary policy meeting.

The USD is expected to pick up strenght today on the US unemployment data. If the US figures come within forecast or exceed, this will push the USD up and put additional pressure on the AUD.

Mix Trading in Market Despite Cheerful German Bond Auction

Mix Trading in Market Despite Cheerful German Bond Auction
Mix Trading in Market Despite Cheerful German Bond Auction
Markets turn mix despite the German and Portuguese bond auction that showed an incline in demand, and that made investors to buy more Euros, so the euro rose against US dollar, while stocks in Europe went red.

The euro advanced sharply against the U.S dollar after the International Monetary Fund said that it could expand its capacity to 1 trillion dollars from 385 billion dollar in order to support the global economy and prevent the debt crisis from spreading outside the euro-area region.

The German successful bond sale also added positivity to the market and supported the euro to hold onto the gains despite the government’s act of revising growth forecasts.

In Europe, CAC 40 declined nearly 0.30%, while DAX inclined by 0.30%, while in US, Dow Jones rose nearly 0.35%, S&P 500 inclined by 0.45%, and NASDAQ rose by 0.76%.

In Currencies market, the euro inclined against USD trading around $1.2809 compared with opening levels at $1.2735, as demand for higher yielding assets increased somehow, while the pound rose trading at $1.5402.

The USD lost the momentum today trading around the 80.74 level, while the USD/YEN pair returned to opening levels to trade at 76.79. The AUD/USD pair inclined trading around the 1.0393, where gold rose trading around $1655.84, and oil dropped trading at $100.23.

Markets Led by Improved Optimism Over Greece

Markets were cautious after in UK the unemployment rate hit a 17-years high at 8.4%, while the World Bank cut its growth forecasts by the most in three years, yet after the IMF said it could propose expanding its lending resources by $1 trillion, sentiment turned positive.

The World Bank said the world economy will grow 2.5% this year compared with June’s estimate of 3.6%, while the euro area may contract 0.3% from a previous estimate of a 1.8% gain. Yet markets had a muted response just like the reaction to S&P’s downgrade to the EFSF’s rating.

Sentiment found more support as Greek Prime Minister will resume negotiations with bondholders as the country is close to reaching an agreement over the size of the losses to be bared by the creditors. Meanwhile Portugal will sell 2.5 billion euros of debt while Germany will sell 4 billion euros of bonds.

After the US manufacturing expanded by the fastest pace in 9 months while the German investor confidence jumped the most on record yesterday, investors will focus on today’s data as well, as the US industrial production is expected to rebound in Dec. after falling for the first time in seven months in Nov.

The PPI in the States is expected to fall, while in UK the unemployment rate hit a 17-years high deepening concerns Britain is heading for another recession. Most Asian stocks advanced today on positive economic data, where Nikkei 225 gained 0.99% while Hang Seng gained 0.30%.

In Europe shares advanced following the string auctions from Europe and the IMF proposal to expand its lending resources where DAX gained 0.74% while CAC 40 gained 0.70%. The euro is enjoying strong gains trading around 1.2830 while the pound is trading with upside momentum around 1.5375.

The yen was a bit stronger trading around 76.75, while the AUD is gaining trading around 1.0405. As the US dollar lost its appeal commodities found support today where crude is trading with gains around $101.25 compared with the lowest at $100.52 while gold is around $1655.50 as eyes are on Europe.

AUD/USD Forecast Jan. 19, 2012, Fundamental Analysis

AUD/USD Forecast Jan. 19, 2012, Fundamental Analysis
AUD/USD Forecast Jan. 19, 2012, Fundamental Analysis
The AUD/USD pair traded near its highest level in 11 weeks, where the US dollar continued to drop against other higher-yielding currencies, while the strong GDP numbers from China still has its optimistic effect on Aussie.

The US dollar retreated for the second day against the euro and other majors, where anticipations refer to some recovery in the U.S. industrial sector and confidence between homebuilders which was enough to support the risk appetite.

On the other hand the Chinese economy reported a better than expected GDP during the fourth quarter, which supported the Aussie demand since China is number one trade partner for Australia.

On Thursday at 00:30 GMT, Australia will release the Employment Change for December where the prior reading was –6.3 thousand and it’s expected to come at 10.0 thousand.

On the other hand, the Unemployment Rate for December is expected to hold at 5.3%.

On Thursday at 13:30 GMT, the U.S. economy will release the Consumer Price Index for December, where the prior reading was 0.0% and it’s expected to come at 0.1%. The annual CPI had a prior reading of 3.4% and expected to come at 3.1%.

The Housing Starts for December will be released also at 13:30 GMT, where the previous reading was up by 9.3% at 685 thousand, and expected to remain unchanged at 685 thousand. The U.S. Building Permits are expected with 0.7% drop to 675 thousand from the prior reading of 681 thousand.

The weekly initial claims are also due at the same time, where the number of people filing for first-time claims for the state unemployment insurance increased to 399 thousand last week.

AUD/USD Fundamental Analysis January 19, 2012, Forecast

Close of Asian Markets

Economic Events:

Jan. 19 

00:30   AUD   Employment Change   10.00K   -6.30K  

00:30   AUD   Unemployment Rate   5.30%   5.30%

Employment Change measures the change in the number of people employed. Job creation is an important indicator of consumer spending.

A higher than expected reading should be taken as positive/bullish for the AUD, while a lower than expected reading should be taken as negative/bearish for the AUD.

08:30 USD Initial Jobless Claims 385.00K 399.00K

08:30  USD Continuing Jobless Claims 3590.00K 3628.00K

Initial Jobless Claims measures the number of individuals who filed for unemployment insurance for the first time during the past week. This is the earliest U.S. economic data, but the market impact varies from week to week.

Continuing Jobless Claims measures the number of unemployed individuals who qualify for benefits under unemployment insurance.

A higher than expected reading should be taken as negative/bearish for the USD, while a lower than expected reading should be taken as positive/bullish for the USD.  If the report comes in under the 385K we can expect to see the USD fall against the AUD, but if the report is at the 399K level or above expect to see the USD rally and trend upwards on solid economic news.

Analysis and Recommendation:

Support and Resistance can be found at these levels    S1: 1.0284 |S2: 1.0198 |S3: 1.0146 |

R1: 1.0422 |R2: 1.0474 |R3: 1.0560

AUD/USD was trading at 1.0374, having made no moves at all during this session.

No economic news is expected out of the Austrailian reports and the US jobs reports are expected to be inline with forecast. This weeks moves if any will be on EU updates. Yesterday and today seems to be a wait and see day. Most currencies are trading within tight ranges. It seems to be the calm before the storm. Gold was slightly down at the end of the US session, but not enough to make any significant dent and it seems it was a more profit taking.

AUD/USD Forecast January 18, 2012, Technical Analysis

AUD/USD rose again on Tuesday as the commodity currencies got a bid yet again. The triangle that we have been watching in this pair was pierced, but the breakout was beaten back by the resistance. The pair looks very strong, but we didn’t get that daily close above the 1.04 handle that we wanted to see in order to get long. The market will now have to be watched in order to see if it falls as markets will sometimes do this before a reversal. The breaking of the uptrend line at the bottom of the triangle would be a massively bearish signal and we would need to see that in order to sell. In the mean time, we are waiting to see if we can close above 1.04 in order to buy, or break the uptrend line of the triangle in order to sell.

AUD/USD Forecast January 18, 2012, Technical Analysis
AUD/USD Forecast January 18, 2012, Technical Analysis

Markets Turned Optimistic on Upbeat Data from China, EU and US

Markets felt optimistic after the Chinese GDP that showed an expansion in fourth quarter growth better than expected, adding that markets continued the sharp rebound after the upbeat European economic sentiment and the slowdown in inflation in addition to the Spanish bond sale.

On the other hand, sentiment continued to be positive after the European Financial Stability Facility (EFSF) sold the targeted amount of bills at an auction today which was met with strong demand.

Knowing that investors moved towards high yielding assets with European stocks gaining some momentum; the euro inclined against US dollar during today’s sessions erasing some of Friday’s losses.

In Europe, CAC 40 rose nearly 1.40%, while DAX inclined by 1.82%, while in US, Dow Jones rose nearly 0.96%, S&P 500 inclined by 0.86%, and NASDAQ rose by 1.09%.

In Currencies market, the euro inclined against USD trading around $1.2738 compared with opening levels at $1.2664, as demand for higher yielding assets increased somehow, while the pound rose trading at $1.5348.

The USD lost the momentum today trading around the 84.08 level, while the USD/YEN pair returned to opening levels to trade at 76.77. The AUD/USD pair inclined trading around the 1.0389, where gold rose trading around $1659.69, and oil also jumped trading at $100.30.

AUD/USD Forecast Jan. 18, 2012, Fundamental Analysis

AUD/USD Forecast Jan. 18, 2012, Fundamental Analysis
AUD/USD Forecast Jan. 18, 2012, Fundamental Analysis
The AUD/USD pair soared to its highest level in two months after the Chinese GDP data supported the Aussie against the greenback, since China is number one trade partner for Australia.

The Australian dollar was able to cover its previous losses against the greenback after China expanded by 8.9 % during the fourth quarter, adding more positive signs for the global demand recovery.

On the other hand, the U.S. dollar dropped against most of its major counterparts, as the Chinese data helped the market to correct to the upside after the long downside wave which has been witnessed in the markets due to the latest EU debt crisis development.

On Wednesday at 23:30 GMT (Tuesday), the Australian economy will release the Westpac Leading Index for November, where the prior reading was 0.1%.

At 13:30 GMT, the U.S. economy will release the Producer Price Index for December, where the prior reading was 0.3% and expected to come at 0.1%, on the other hand the annual Producer Price Index had a prior reading of 5.7% and it’s expected to come at 5.1%.

The Total Net TIC Flows for November will be released at 14:00 GMT, with a previous reading of -$48.8 billion, while the Net Long-term TIC Flows had a previous reading of $4.8 billion.

The U.S. Industrial Production for December will be released at 14:15 GMT, and expected at 0.5% after 0.2% drop. The Capacity Utilization for December had a prior reading of 77.8% with expectations to rise to 78.1%.

Markets Rebound on China’s GDP Data Ahead of Bond Auctions in Europe

Although the European woes are persisting, the better-than-expected annual growth in China helped ease the markets’ fears, soothing the worries from the EFSF downgrade by S&P last night, and reducing the appeal of safe haven while increasing demand on the higher yielding assets.

The annual gross domestic product in China rose 8.9% during Q4 from 8.7% expected, yet slower than the 9.1% previous, fueling believes officials will accelerate the easing policies since this is the weakest growth pace in 2-1/2 years while Europe’s debt crisis might curb demand on exports even more.

On the other hand, S&P continued its downgrade string by lowering the EFSF’s top rating to AA+ from AAA, raising speculations the lending capacity of the facility will be reduced to 180 billion euros from 440 billion. Yet markets will await the EFSF, Spain and Greece’s bond auctions today before reacting to this news.

Investors will be watching the manufacturing data from New York today, expected to expand, as well as the German investors’ confidence, expected to improve. The 4th quarter earnings from Citygroup and Wells Fargo will also be of interest, as the US markets will return from the Martin Luther King holiday.

Sentiment has been improving since yesterday’s bills auction in France which saw firm demand, driving the yields down and easing the fears ignited after S&P downgraded the credit rating for France and eight other European nations, where France and Austria lost their top-notch AAA rating.

Asian stocks advanced today on China’s GDP and the firm demand during the French auction yesterday, where Nikkei 225 rose 1.05% while China’s CSI 300 Index rose 4.90%. In Europe shares were boosted by China’s data as well, where DAX gained 1.01$ while CAC 40 gained 1.36%.

The euro enjoys strong gains trading around 1.2765, as risk appetite improved and demand on the safe haven USD fell, as a result the dollar index is trading with bearish momentum around 80.90. The yen was stronger trading around 76.65, while the AUD is gaining trading around 1.0430 from 1.0311 at opening.

The pound extended its gains trading at 1.5370 after the CPI fell in Dec. to 4.2% from 4.8% previous, opening the way for policy makers to focus on growth. As the dollar lost its appeal commodities found support today where crude is trading with gains around $100.50 while gold is around $1.663.50.

AUD/USD Forecast January 17, 2012, Technical Analysis

AUD/USD gapped down on the open of the week, and has since filled the area. The resulting candle is a shooting star-like candle for the Monday session. The market has been in a triangle for some time now, and we are getting fairly close the point where the market will have to make up its mind.

The gold markets are currently sitting just below massive resistance, and is often a predictor of the Aussie dollar. The markets look somewhat similar, and as a result we think that one will lead the other. However, you never can tell which one moves first, so it makes sense to watch both markets at the same time. For gold, we need to see a strong close on the daily chart above the $1,650 level, and in this market we would need to see a daily close above the 1.04 level.

With this in mind, it should be soon that we see the move play out. The triangle is an ascending one that has formed over the last month, and this type of pattern truly does tend to work out over time. The uptrend line of the triangle would be the “line in the sand” for the bulls, and if we close below that level – the bears would start selling this market off. If that happens, we could see a run to the 0.96 handle, which is the bottom of the aforementioned triangle.

We prefer to take the long side of this market as the pair has been so bullish over the last several years. The bullish move in this pair could continue for much longer than the bearish one, and we could see a nice long-term move if we get above this level. However, the downside has to be considered, and even embraced if we see the breakdown.

A break of the 1.04 level on a daily close measures out to 1.12 based upon the shape of the triangle, and we are willing to buy and hold if that happens. As for the breakdown of the uptrend line – that is good for about 3-4 handles, not a bad trade.

AUD/USD Forecast January 17, 2012, Technical Analysis
AUD/USD Forecast January 17, 2012, Technical Analysis

AUD/USD Fundamental Analysis Jan.18, 2012 Forecast

Close of Asian Session

 

Economic Events:

18:30 AUD Westpac Consumer Sentiment Previous -8.30%

The Westpac Consumer Sentiment Index measures the change in the level of consumer confidence in economic activity. On the index, a level above 100.0 indicates optimism; below indicates pessimism. The data is compiled from a survey of about 1,200 consumers which asks respondents to rate the relative level of past and future economic conditions. The Consumer Sentiment Index is an average of five component indexes which reflect consumers’ evaluations of their household financial situation over the past year and the coming year, anticipated economic conditions over the coming year and the next five years, and buying conditions for major household items.

Consumers are also surveyed about their views on buying conditions for cars and dwellings, the wisest place for savings, and economic news recall.

A higher than expected reading should be taken as positive/bullish for the AUD, while a lower than expected reading should be taken as negative/bearish for the AUD.

Importance:       Medium

Source Of Report:            Faculty of Economics and Commerce Melbourne Institute

Release URL:      http://melbourneinstitute.com/

19:30 AUD New Motor Vehicle Sales (MoM) 2.30% -0.70%

Forecast                               2.30%

Previous                              -0.70%

New Motor Vehicle Sales measures the change in the number of new cars and trucks sold domestically. It is an important indicator of consumer spending is closely correlated to consumer confidence.

A higher than expected reading should be taken as positive/bullish for the AUD, while a lower than expected reading should be taken as negative/bearish for the AUD.

 

Analysis and Recommendation:

AUD/USD was trading at 1.0371, up 0.55%. The couple will likely find support at 1.0233, Friday’s low, and resistance at 1.0378.

The AUD is slightly up this morning still firmly entrenched in our recent trading range. The US market was closed overnight to observe Martin Luther King Day holiday which contributed to the lacklustre session as global markets digested and shrugged of a round of credit downgrades to debt-saddled Eurozone nations. All eyes will be on China’s retail sales and industrial production numbers due out today for next direction. The duo are expect to trade within a tight rage throught foreign trading sessions today. It is a wait and see moment, let’s see what happens with the economic reports. Although Gold was up in early trading which should help push up to ANZ.

Markets Turned Flat after France Auction

Markets were flat today, as Euro managed to cover the gap that has emerged over the weekend after France lost its top credit rating AAA, while eight other European nations saw their credit ratings being cut by S&P on Friday.

On the other hand, the sentiment improved further in the market after the French bond auction, which came better than expectations, as the country was able to access the capital market easily on lower yields and strong demand despite the fact that Standard and poor’s rating agency downgraded the French top credit rating of AAA by one notch to AA+.

Knowing that investors moved towards high yielding assets with European stocks gaining some momentum; the euro covered the gap and European stocks inclined erasing earlier losses.

In Europe, CAC 40 rose nearly 1.0%, while DAX inclined by 1.4%, while the American market is closed today, as this day is Martin Luther King Day in the United States.

In Currencies market, the euro inclined against USD trading around $1.2674 compared with opening levels at $1.2634, as demand for higher yielding assets increased somehow, while the pound rose trading at $1.5332.

The USD lost the momentum today trading around the 81.37 level, while the USD/YEN pair dropped to trade at 76.71. The AUD/USD pair inclined trading around the 1.0331, where gold rose trading around $1644.50, and oil also jumped trading at $99.57.

AUD/USD Forecast Jan. 17, 2012, Fundamental Analysis

AUD/USD Forecast Jan. 17, 2012, Fundamental Analysis
AUD/USD Forecast Jan. 17, 2012, Fundamental Analysis
, where the Australian dollar had the second best performance against the dollar after the Kiwi, while the latest EU crisis reduced demand for the Aussie.

Standard & Poor’s downgraded nine countries from the euro zone including France and Italy, which fueled concerns over the outlook for the global economy and forced higher-yielding currencies to retreat.

On the other hand the Australian dollar is waiting for the employment data from the Australian economy this week, where expectations refer to further weakening in the employment sector which could force the RBA to take further action to support demand.

We need to watch the Chinese GDP figures early on Tuesday as the economy is expected to have weakened the most in ten quarters and such weak data or even worse than expectations will have a strong bearish impact on Aussie.

On Tuesday, the U.S. Empire Manufacturing for January will be released at 13:30 GMT, where the previous reading was 9.53 and expected to improve to 10.50.

Corrections Following S&P’s Mass Downgrade in Europe

Markets are recovering some of the losses seen on Friday in a correctional move, after France lost its top credit rating while eight other European nations saw their credit ratings being cut by S&P on Friday, which determined investors to strongly head towards safe haven.

Standard & Poor’s mass debt rating cuts targeted nine of the euro zone’s 17 countries. France and Austria lost their AAA rating which fell to AA+, while Cyprus, Italy, Portugal and Spain were cut two grades and the long-term ratings on Malta, Slovakia and Slovenia were also downgraded.

S&P also added it is considering to downgrade the euro zone’s bailout fund, fueling believes that the financial turmoil might intensify as conditions in Europe may deteriorate further while the efforts to solve the debt crisis may be derailed, threatening the outlook for the global recovery.

Following S&P’s decision, German Chancellor Angela Merkel confirmed over the weekend the need to “speed up plans to introduce measures for greater fiscal unity within the euro zone”, while European leaders will race this week trying to rescue their efforts to save Greece and implement new fiscal rules.

Adding to nervousness was the fact that talks between Greek officials and creditors stalled last week on disagreements over the size of the losses raising the fears of default. These developments brought looses in Asia today where Nikkei 225 fell 1.43% while Hang Seng fell 1.00%.

While the U.S. markets will be closed on Monday for Martin Luther King holiday, and economic data is absent today from Europe, markets will closely follow France’s 8.7 billion euros bills auction later today, while Nicolas Sarkozy will meet Spanish Prime Minister Mariano in Madrid.

Some relief was fueled by Germany’s ability to keep its top-notch AAA rating and a stable outlook, while Belgium, the Netherlands, Finland, Ireland, Estonia and Luxembourg had their ratings affirmed. This helped European shares to start the week with some gains where DAX rose 0.37% while FTSE 100 gained 0.06%.

The euro recovered some of Friday’s losses trading around 1.2260, while the pound is around 1.5325. The dollar index is weakening trading around 81.45 after rising as high as 81.77 on Friday. The AUD rose today trading around 1.0310 while the yen strengthened trading around 76.80 from 77.05 opening.

After falling as low as $97.68 on worries over Europe, oil is trading as of this writing around $99.35 after the ECB said it will do all it can to calm the situation after S&P’s mass downgrade. Gold also recovered today trading around $1643.00 from the opening at $1634.30.

AUD/USD Fundamental Analysis January 17, 2012, Forecast

Economic Events:

18:30  AUD  Westpac Consumer Sentiment  Previous -8.30%

The Westpac Consumer Sentiment Index measures the change in the level of consumer confidence in economic activity. On the index, a level above 100.0 indicates optimism; below indicates pessimism. The data is compiled from a survey of about 1,200 consumers which asks respondents to rate the relative level of past and future economic conditions. The Consumer Sentiment Index is an average of five component indexes which reflect consumers’ evaluations of their household financial situation over the past year and the coming year, anticipated economic conditions over the coming year and the next five years, and buying conditions for major household items.

Consumers are also surveyed about their views on buying conditions for cars and dwellings, the wisest place for savings, and economic news recall.

A higher than expected reading should be taken as positive/bullish for the AUD, while a lower than expected reading should be taken as negative/bearish for the AUD.

Importance:       Medium

Source Of Report:            Faculty of Economics and Commerce Melbourne Institute

Release URL:      http://melbourneinstitute.com/

19:30  AUD  New Motor Vehicle Sales (MoM) 2.30%  -0.70%

Forecast                               2.30%

Previous                              -0.70%

New Motor Vehicle Sales measures the change in the number of new cars and trucks sold domestically. It is an important indicator of consumer spending is closely correlated to consumer confidence.

A higher than expected reading should be taken as positive/bullish for the AUD, while a lower than expected reading should be taken as negative/bearish for the AUD.

Analysis and Recommendation:

The Australian Dollar was lower against the U.S. Dollar during Mondays trading session.

AUD/USD was trading at 1.0277, down 0.47% The pair was likely to find support at 1.0233,  and resistance at 1.0378.

The downgrade of the 9 nations of the EU will have an impact on Australia but the same impact on the USD. It is the euro that will feel the major impact.

Meanwhile, the Australian Dollar was down against the Euro and the Japanese Yen, with EUR/AUD gaining 0.24% to hit 1.2306 and falling 0.65% to hit 78.97.

Tuesday will be a wait and see day, as the US markets are closed for a holiday on Monday. Watch closely for any news from the EU.