Forexpros – The Australian dollar ended the week higher against its U.S. counterpart on Friday, boosted by positive Australian economic data, but remained under pressure as sustained concerns over the handling of Spain’s financial woes dented investor confidence.
AUD/USD hit 1.0001 on Thursday, the pair’s highest since May 15; the pair subsequently consolidated at 0.9913 by close of trade on Friday, climbing 2.16% over the week.
The pair was likely to find support at 0.9819, Friday’s low and resistance at 1.0001, Thursday’s high.
The Aussie found support after official data on Friday showed that Australia’s trade deficit narrowed far more-than-expected in April, hitting AUD0.20 billion from a deficit of AUD1.28 billion the previous month.
Analysts had expected the trade deficit to narrow to AUD0.92 billion in April.
A separate report showed that home loans in Australia rose 0.2% in April, beating expectations for a 0.1% rise and following a 0.8% increase the previous month.
Meanwhile, Reserve Bank of Australia Governor Glenn Stevens delivered a speech titled “The Glass Half Full”, in which he underlined positive elements such as economic growth above 4% over the past year and inflation a little over 2%.
On Thursday, official data showed that Australia’s economy added 38,900 jobs in May, exceeding expectations for a 2,200 decline, and that the unemployment rate ticked up from 5.0% to 5.1% in May, in line with expectations.
But market sentiment remained under pressure after rating’s agency Fitch cut Spain’s credit rating by three notches to triple-B on Friday, and indicated that further cuts could still be made as the country struggles to stabilize its fragile banking system.
The downgrade came as senior European Union officials prepared to discuss options for financial aid to Madrid in a telephone conference on Saturday morning.
Traders also remained cautious after China announced a surprise interest rate cut on Thursday, which some market participants took as a sign that the world’s second largest economy may be slowing more than previously thought.
The greenback gained some ground after Federal Reserve Chairman Ben Bernanke warned on Thursday that the U.S. economy faced “significant risks” arising from the crisis in Europe, but refrained from indicating that the central bank was prepared to implement any fresh stimulus measures.
In testimony to a congressional committee in Washington, Bernanke said that the Fed remained “prepared to take action” to protect the U.S. economy and financial system if stresses on the financial system escalate, but stopped short of indicating what these actions might be.
In the week ahead, markets will be keeping a close eye on developments in Spain, as Madrid begins to hammer out the details of a rescue package for its banks, while uncertainty over the outcome of Greek elections on June 17 is likely to weigh.
Investors will also be eyeing as Wednesday’s U.S. retail sales data, as investors try to gauge the strength of the country’s economic recovery.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets.
Monday, June 11
Markets in Australia are to remain closed due to a national holiday.
Tuesday, June 12
Australia is to publish a report on business confidence, an important signal of economic health.
The U.S. is to publish official data on import prices as well as a government report on the federal budget balance.
Wednesday, June 13
Reserve Bank of Australia Governor Glenn Stevens is scheduled to speak at the Prime Minister’s Economic Forum, in Brisbane. Australia is also to produce industry data on consumer sentiment.
Later Wednesday, the U.S. is to release official data on retail sales, the foremost indicator of consumer spending, which accounts for the majority of overall economic activity. The country is also to produce data on producer price inflation, business inventories and crude oil stockpiles.
Thursday, June 14
Australia is to publish a report on inflation expectations.
Also Thursday, the U.S. is to produce official data on consumer price inflation and the country’s current account, as well as a government report on initial unemployment claims.
Friday, June 15
The U.S. is to round up the week with official data on manufacturing activity in the New York area, the capacity utilization rate and industrial production. The country is also to release preliminary data by the University of Michigan on consumer sentiment and inflation expectations.
Forexpros
