Forexpros – The Australian dollar ended the week sharply lower against its U.S. counterpart on Friday, as ongoing concerns over the handling of Greece’s financial woes weighed on demand for riskier assets.
AUD/USD hit 1.0201 on Thursday, the pair’s lowest since October 20; the pair subsequently consolidated at 1.0379 by close of trade on Friday, tumbling 3.11% over the week.
The pair is likely to find support 1.0201, the low of November 3 and resistance at 1.0565, the high of November 1.
The Aussie bounced off a two-week low on Thursday after the European Central Bank lowered its interest rate to 1.25% from 1.50% as the region’s escalating debt crisis overshadowed concerns over persistently high inflation.
Speaking at the bank’s post policy meeting press conference, new president Mario Draghi said that ongoing tensions in financial markets could slow the pace of growth in the euro zone and said the region’s economy continued to be “subject to particularly high uncertainty and intensified downside risks.”
Market sentiment broadly weakened on Friday after German Chancellor Angela Merkel said that few countries in the Group of 20 nations had committed to providing more resources for the euro zone’s rescue fund.
Investors were also jittery ahead of a government confidence vote in Greece, scheduled late Friday evening. Despite strong internal opposition, Papandreou’s government passed the vote by a very narrow margin.
The Australian dollar fell sharply against the greenback on Tuesday after the Reserve Bank of Australia cut its cash rate by 0.25% to 4.5%, citing a moderation in the pace of global growth.
Commenting on the decision, RBA governor Glenn Stevens said that “with overall growth moderate, inflation now likely to be close to target and confidence subdued outside the resources sector, the Board concluded that a more neutral stance of monetary policy would now be consistent with achieving sustainable growth and 2-3% inflation over time.”
In the week ahead, developments in Greece will remain in focus, as opposition parties are calling for early elections while George Papandreou is pushing for a cross-party government to implement the latest European aid package.
Investors will also be closely watching for a U.S. weekly report on unemployment claims as well as Australian data on trade balance and unemployment.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, November 7
Australia is to produce a report on job advertisements.
Tuesday, November 8
Australia is to publish an official report on trade balance, followed by the National Australia Bank business confidence index.
Wednesday, November 9
Australia is to release a report on the Westpac consumer sentiment index. Later Wednesday, an official report is to be published on Australian home loans, a leading indicator of demand in the housing market.
In the U.S., Federal Reserve Chairman Ben Bernanke is due to deliver welcoming remarks at the Federal Reserve Conference on Small Business and Entrepreneurship during an Economic Recovery. An official report on U.S. crude oil inventories is also to be released later Wednesday.
Thursday, November 10
Australia is to produce data on inflation expectations, followed by an official report on employment change, a leading indicator of consumer spending. Later in the day, the country is to publish an official report on the unemployment rate, a key signal of overall economic health.
Meanwhile, the U.S. is also to release a report on trade balance as well as weekly data on unemployment claims. Later in the day, government reports are to be released on import prices and federal budget balance.
Friday, November 11
The U.S. is to round up the week with the University of Michigan’s preliminary report on consumer sentiment.
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