Forexpros – The Australian dollar ended the week sharply lower against its U.S. counterpart on Friday, tumbling to a one-month low as sustained concerns over the worsening debt crisis in the euro zone weighed on risk appetite.
AUD/USD hit 0.9963 on Friday, the pair’s lowest since October 12; the pair subsequently consolidated at 1.0005 by close of trade on Friday, plummeting 3.25% over the week.
The pair is likely to find support at 0.9905, the low of October 11 and resistance at 1.0183, the high of November 16.
The Aussie found support on Friday after briefly dropping below parity as risk sentiment recovered amid speculation that the European Central Bank may lend to the International Monetary Fund in order to bail out troubled euro zone economies.
Market sentiment also strengthened after newly-appointed Italian Prime Minister Mario Monti won a parliamentary confidence vote, giving him a mandate to begin drafting his agenda, which includes passing emergency measures to restore investor confidence, as well as broader structural reforms.
Following the vote, Italian bond yields found support, falling back below the 7% threshold widely seen as unsustainable for borrowing in the long term. Spanish bond yields also eased after rising close to 7% at a government bond auction earlier in the week, as the ECB purchased Italian and Spanish government debt.
But the Aussie’s gains were limited by sustained concerns over debt contagion in the single currency bloc and as investors eyed the upcoming national elections in Spain, scheduled on Sunday.
The Australian dollar fell sharply against the greenback on Thursday as euro zone worries overshadowed upbeat U.S. reports on housing and employment. Government data showed that U.S. building permits rose to the highest level since March 2010 in October, while U.S. housing starts were largely unchanged.
A separate report revealed that the number of people who filed for unemployment assistance in the U.S. in the week ending November 11 fell by 5,000 to a seven-month low of 388,000.
In the week ahead, investors will be keeping a close eye on developments within the euro zone. Meanwhile, U.S. data on third quarter growth and durable goods orders will be closely watched, as well as an index of leading economic indicators to be released by Australia.
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 Friday, as there are no relevant events on this day.
Monday, November 21
The U.S. is to release industry data on existing home sales.
Tuesday, November 22
The U.S. is to release preliminary data on gross domestic product, the broadest measure of economic activity and the leading indicator of the economy’s health. In addition, the U.S. Federal Reserve is to publish the minutes of its November policy meeting.
Wednesday, November 23
Australia is to publish an index of leading economic indicators, which is designed to predict the outcome of the economy over the following six months, as well as official data on construction work done, an important gauge of the construction industry.
The U.S. is to publish a string of economic data, including a government report on durable goods orders, a leading indicator of production. The country is also to publish its weekly report on initial jobless claims, in addition to data on crude oil stockpiles, inflation, personal income and personal spending. Meanwhile, the University of Michigan is to release revised data on inflation expectations and consumer sentiment.
Thursday, November 24
Markets in the U.S. are to remain closed for the Thanksgiving holiday.
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