Forexpros – The Australian dollar climbed to a five-week high against its U.S. counterpart on Friday, boosted by speculation that the Federal Reserve may implement more monetary easing measures.
AUD/USD hit 0.9849 on Wednesday, the weekly low; the pair subsequently consolidated at 1.0072 by close of trade on Friday, gaining 0.87% on the week.
The pair is likely to find support at 0.9921, Thursday’s low and resistance at 1.0217, the high of May 8.
Sentiment on the greenback was weighed by growing expectations that the U.S. central bank may announce fresh stimulus measures following its meeting next week, after a recent string of weak economic data.
Data on Friday showed that U.S. consumer sentiment fell to a six-month low in June, fuelling concerns that economic growth is faltering. Separate reports showed that an index of manufacturing activity in New York dropped sharply in June, while U.S. manufacturing output fell in May for the second time in three months.
Demand for riskier assets was also supported by expectations that world central banks would implement measures to stabilize markets in the event of turmoil on Monday, following Sunday’s elections in Greece, which could determine if the country remains in the euro zone.
On Friday, the European Central Bank said it would continue to supply liquidity to banks as necessary, one day after the Bank of England announced an emergency liquidity package to support the U.K. banking system.
Meanwhile, concerns over elevated Spanish and Italian borrowing costs lingered on Friday, despite efforts to insulate Madrid from the effects of the ongoing sovereign debt crisis by agreeing on a EUR100 billion aid package for Spanish banks.
The yield on Spanish 10-year bonds eased back to settle at 6.87% on Friday, but remained close to the critical 7% threshold which prompted bailouts in Greece, Ireland and Portugal.
In the week ahead, investor sentiment is likely to be decided by the outcome of Sunday’s elections in Greece, while a G-20 summit due to start Monday may produce fresh measures to combat the crisis in Europe.
Meanwhile, market participants will be closely watching the outcome of the Federal Reserve’s monetary policy meeting on Wednesday.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets. The guide skips Friday, as there are no relevant events on this day.
Monday, June 18
Australia is to produce official data on new motor vehicle sales, an important sign of consumer confidence.
Also Monday, leaders from the Group of 20 nations are to begin a two-day summit in Mexico.
Tuesday, June 19
The Reserve Bank of Australia is to publish the minutes of its June policy-setting meeting.
The U.S. is to publish official reports on building permits, an excellent gauge of future construction activity, as well as data housing starts, a leading indicator of economic health.
Meanwhile, leaders from the Group of 20 nations are to hold a second day of talks at a
Wednesday, June 20
Australia is to publish results of the Conference Board’s leading index, followed by the Melbourne Institute’s leading index.
Later Wednesday, the Federal Reserve is to announce its benchmark interest rate and publish its rate statement and economic projections. The data is to be followed by a press conference with Fed Chairman Ben Bernanke to discuss the monetary policy decision. The U.S. is also to release government data on crude oil stockpiles
Thursday, June 21
The U.S. is to produce government data on unemployment claims, followed by preliminary data on manufacturing activity and an industry report on existing home sales. The country is also to release data on manufacturing activity in the Philadelphia area.
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