Forexpros – The Australian dollar ended the week sharply lower against its U.S. counterpart on Friday, as market sentiment came under pressure ahead of a string of key euro zone data in the coming week, while upbeat reports from the U.S. sent the greenback broadly higher.
AUD/USD hit 1.0410 on Friday, the pair’s lowest since July 27; the pair subsequently consolidated at 1.0417 by close of trade on Friday, tumbling 1.28% over the week.
The pair was likely to find support at 1.0355, the low of July 19 and resistance at 1.0540, the high of August 14.
Risk sentiment came under pressure, as investors eyed upcoming economic data from the euro zone for signs of progress in the handling of the region’s debt crisis.
The Aussie had climbed to a three-day high against the greenback earlier Friday, a day after German Chancellor Angela Merkel backed European Central Bank President Mario Draghi’s vow to do all that is necessary to defend euro.
Her comments increased expectations the ECB would buy Spanish and Italian bonds next month to lower the two countries’ borrowing costs.
The Aussie also came under pressure amid speculation over further possible rate cuts by the Reserve Bank of Australia.
Meanwhile, the U.S. dollar found support after data on Friday showed that the University of Michigan’s consumer sentiment index for August hit its highest level in three months, coming in at 73.6 from 72.3 in July and outstripping forecasts for a reading of 72.4.
In addition, the Conference Board reported that its index of leading indicators rose more-than-expected in July, ticking up 0.4% after a 0.4% decline the previous month.
Analysts had expected the index to rise 0.2% in July.
The data came after better-than-expected U.S. retail sales and industrial production data earlier in the week tempered expectations for another round of quantitative easing by the U.S. central bank.
In the week ahead, market participants will be awaiting Wednesday’s minutes of the Federal Reserve’s August meeting for any indications on the future possible direction of monetary policy. The U.S. is also to release closely watched reports on the housing sector and manufacturing production.
Elsewhere, the RBA is to release the minutes of its most recent policy meeting.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets. The guide skips Monday, as there are no relevant events on this day.
Tuesday, August 21
The RBA is to produce the minutes of its August policy meeting. The report will be closely watched for indications on the central bank’s future monetary policy decisions.
Wednesday, August 22
Australia is to publish its index of leading economic indicators.
Later in the day, the Fed is to produce the minutes of its August policy meeting, amid growing speculation over whether the U.S. central bank will soon announce a third round of quantitative easing. The U.S. is also to release government data on crude oil stockpiles.
Thursday, August 23
The U.S. is to release its weekly government report on initial jobless claims, followed by preliminary data on manufacturing activity and official data on new home sales, a key gauge of economic health.
Friday, August 24
RBA Governor Glenn Stevens is scheduled to testify before the Standing Committee on Economics, in Canberra. Meanwhile, the Conference Board’s is to release a report on Australia’s index of leading economic indicators.
The U.S. is to round up the week with government data on durable goods orders, a key indicator of manufacturing production.
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