Forexpros – The Australian dollar ended the week higher against its U.S. counterpart on Friday, but gains were limited as ongoing concerns over the debt crisis in the euro zone continued to weigh.
AUD/USD hit 1.0218 on Wednesday, the pair’s highest since December 9; the pair subsequently consolidated at 1.0146 by close of trade on Friday, jumping 1.56% over the week.
The pair is likely to find support at 1.0051, the low of December 21 and resistance at 1.0223, the high of December 9.
Trading volumes remained thin ahead of the Christmas holiday weekend, resulting in quiet trade.
The Aussie rallied to an eight-day high against the U.S. dollar on Wednesday, before trimming some of the day’s gains after an unprecedented EUR489.19 billion three-year loan by the European Central Bank.
Markets were hoping the move would avoid a credit crunch in the euro zone and help increase bond purchases of indebted euro zone countries. But the heavy demand from 523 European lenders underlined concerns over the scale of the financial crisis in the single currency bloc.
Earlier in the day, a report showed that the growth rate of Australia’s Westpac-Melbourne Institute leading index was 2.6% in October, below its long term trend of 3.0% but still ticking up 0.1% after a 0.3% decline the previous month.
Market sentiment also remained supported on Thursday, amid mixed U.S. data. A report by the University of Michigan’s said its index of overall consumer sentiment rose to 69.9 in December, exceeding expectations for a rise to 68.2.
A separate report showed that the number of people who filed for unemployment assistance in the U.S. last week fell unexpectedly to the lowest level since April 2008, dropping to 364,000.
The data came after the Bureau of Economic Analysis said gross domestic product increased at a seasonally adjusted annual rate of 1.8% during the third quarter, down from a previous estimate of 2.0%.
The data primarily reflected a downward revision to personal consumption, which grew 1.6% compared to a previous estimate of 2.3%. Consumer spending typically accounts for nearly 70% of U.S. economic growth.
The Aussie extended gains on Friday after official data showed that U.S. home sales rose more-than-expected in November, while a separate report showed that U.S. core durable goods orders also rose-more-than-expected last month, advancing 3.8% from 0.0% in October. But investors remained concerned amid sustained speculation over imminent downgrades in the euro zone.
The Aussie rose sharply against the greenback earlier in the week after the Reserve Bank of Australia’s last meeting showed that policymakers saw continued expansion in the domestic economy.
In the week ahead trading volumes are expected to remain light because many traders have closed books to lock in profit before the end of the year, reducing liquidity in the market and increasing the volatility.
Meanwhile, the U.S. is to release key reports on consumer confidence, jobless claims and home sales, while Australia is to publish data on private sector credit.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, December 26
Markets in the U.S. and Australia will be remaining closed for the Boxing Day holiday.
Tuesday, December 27
Markets in Australia will be remaining closed for a post-Christmas bank holiday.
The U.S. is to publish industry data on house price inflation, a leading indicator of demand in the housing market. The U.S. is also to release data on consumer confidence and manufacturing activity in Richmond.
Wednesday, December 28
The U.S. is to release the treasury currency report.
Thursday, December 29
The U.S. is to publish its weekly government report on initial jobless claims, as well as industry data on pending home sales, a leading indicator of economic health. The U.S. is also to release official data on crude oil stockpiles and industry data on business conditions in the Chicago area, a leading indicator of economic health.
Friday, December 30
Australia is to produce government data on private sector credit.
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