Forexpros – Last week saw the Australian dollar tumble to a one-month low against its U.S. counterpart before paring some of the week’s losses as risk sentiment recovered on signs of improvement in handling the euro zone’s debt crisis.
AUD/USD hit 1.0051 on Thursday, the pair’s lowest since October 12; the pair subsequently consolidated at 1.0273 by close of trade on Friday, shedding 1.26% over the week.
The pair is likely to find support at 1.0051, the low of November 10 and resistance at 1.0445, the high of November 3.
Risk sentiment was boosted on Friday after Italy’s Parliament approved an amendment to the country’s 2012 budget, paving the way for the resignation of Prime Minister Silvio Berlusconi on Saturday.
Also Friday, incoming Greek Prime Minister Lucas Papademos and his cabinet were sworn in. Papademos will implement the country’s latest EUR130 billion bailout before leading the country to early elections.
Elsewhere, preliminary data showing that U.S. consumer sentiment rose to its highest level in five months this month contributed to stronger risk appetite.
The University of Michigan’s consumer sentiment index rose to a seasonally adjusted 64.2, from 60.9 in October, outstripping forecasts for an increase to 61.0.
The Aussie plummeted over 2% against the U.S. dollar on Wednesday as yields on 10-year Italian bonds rose above the 7% threshold, a level widely considered unsustainable for continued borrowing.
On Thursday, official data showed that the number of employed people in Australia rose by 10,100 in October, in line with expectations, while the unemployment rate declined more-than-expected, ticking down to 5.2% after a reading of 5.3% in September.
In the week ahead, investors will continue to closely monitor developments in the euro zone as talks on the formation of an emergency government in Italy get started.
Also next week, the U.S. is to release data on retail sales, housing and inflation, while the Reserve Bank of Australia is to publish the minutes of its most recent policy-setting meeting.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets. The guide skips Monday and Friday, as there are no relevant events on these days.
Tuesday, November 15
The RBA is to release the minutes of its November policy meeting. The minutes are closely watched as they give investors a detailed insight into economic conditions from the bank’s point of view. Australia is also to release official data on new vehicle sales, a leading indicator of consumer spending.
Also Tuesday, the U.S. is to produce a flurry of economic data with reports on retail sales, producer price inflation, business inventories and a report on manufacturing activity in New York State.
Wednesday, November 16
Australia is to publish an index of leading economic indicators, designed to predict the future direction of the economy. The country is also to publish data on wage costs, a leading indicator of consumer inflation. Also Wednesday, RBA Governor Glenn Stevens is to speak.
Later in the day, the U.S. is to publish data on consumer inflation, as well as data on industrial production, the capacity utilization rate, crude oil stockpiles and the balance of foreign and domestic investment in long-term securities.
Thursday, November 17
The U.S. is to publish its weekly report on initial jobless claims, as well as data on building permits, an excellent gauge of future construction activity and housing starts. The country is also to release a report on manufacturing activity in Philadelphia, a leading indicator of economic health.
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