Forexpros – The Australian dollar rose against its U.S. counterpart on Friday, paring some of the week’s losses as market sentiment improved amid new hopes of progress in handling the debt crisis in the euro zone.
AUD/USD hit 0.9860 on Thursday, the pair’s lowest since November 28; the pair subsequently consolidated at 0.9980 by close of trade on Friday, tumbling 2.21% over the week.
The pair was likely to find support at 0.9812, the low of November 22 and resistance at 1.0106, the high of November 18.
The Aussie found support after European Union leaders unveiled a new agreement to tighten fiscal rules, hoping to strengthen economic integration in the single currency bloc and tackle the region’s two-year-old debt crisis. The plan is to be discussed by member states at a meeting on Tuesday.
Also Friday, the head of the euro zone’s bailout fund, the European Financial Stability Facility, said that around 600 billion euros are available to fight the euro zone’s debt crisis, a greater amount than Italy and Spain’s combined funding needs for 2012, and more will be provided in March if needed.
Earlier in the day, official data showed that core consumer price inflation in the U.S. rose more-than-expected in November, ticking up 0. 2% after a 0.1% increase the previous month.
The report also showed that CPI was flat after a 0.1% decline in October. Analysts had expected CPI in the U.S. to rise 0.1% in November.
Market sentiment improved on Thursday after the U.S. Department of Labor said that the number of individuals filing for initial jobless benefits last week fell to a three-year low of 366,000.
Data also showed that the New York Federal Reserve’s index of manufacturing conditions jumped to a seven-month high in December, while the Philadelphia Federal Reserve’s index of manufacturing conditions doubled expectations with a reading at 10.3.
Meanwhile, Australia’s Melbourne Institute said that its inflation expectations slightly eased to 2.4% in December from 2.5% the previous month.
A separate report showed that new motor vehicle sales in Australia fell 0.7% in November after a 1% increase the previous month.
The greenback rallied earlier in the week after the Fed fell short of announcing additional stimulus measures as it noted modest improvement in the U.S. economy but added that market turbulence in the face of Europe’s debt woes posed a big risk.
In the week ahead investors will be keeping a close watch on Tuesday’s report on German business climate, to assess the impact of the debt crisis on the region’s largest economy.
Meanwhile, the U.S. is to release key reports on the housing sector, durable goods and jobless claims, 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, as there are no relevant events on this day.
Tuesday, December 20
The RBA is to publish the minutes of its most recent policy setting meeting, which contain insights on current economic conditions from the bank’s perspective. The country is also to publish an index of leading economic indicators.
Later Tuesday, the U.S. is to publish official data on building permits, an excellent gauge of future construction activity, as well as a report on housing starts.
Wednesday, December 21
Australia is to publish an index of leading indicators, which is designed to forecast the direction of the economy.
Also Wednesday, the U.S. is to produce industry data on existing home sales, a leading indicator of economic health, as well as data on crude oil stockpiles and the treasury currency report.
Thursday, December 22
The U.S. is to publish its weekly report on initial jobless claims, a leading indicator of economic health. The country is also to produce revised data on third quarter GDP, while the University of Michigan is to release revised data on consumer sentiment and inflation expectations.
Friday, December 23
The U.S. is to round up the week with official data on durable goods orders, a leading indicator of production as well as data on personal spending income, personal spending and new home sales.
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