COZfx: AUD/USD weekly outlook

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COZforex: The Australian dollar ended Friday’s session near the lowest level since September 2010 against its US counterpart, after the Federal Reserve said it could start scaling back its bond buying program by the end of the year.

AUD/USD hit 0.9162 on Thursday, the pair’s lowest since September 8, 2010; the pair subsequently consolidated at 0.9212 by close of trade on Friday, 3.73% lower for the week. COZforex senior currency strategist Ian • Quigley said, AUD/USD is predicted to find support at 0.9168, and a drop through could take it to the next support line of 0.9110. Meanwhile, the pair is predicted to find its first resistance at 0.9278, and a rose through could take it to the next resistance line of 0.9330.

In commodities, LME Copper prices declined 2.4% or $164.50/MT to $6808.0/MT. Meanwhile, Aluminium prices dropped 2.5% or $44.0/MT to $1748.5/MT.

The dollar rallied after Fed Chairman Ben Bernanke said Wednesday that the bank could begin slowing its USD85 billion-a-month bond purchasing program by the end of 2013 and wind it down completely by the middle of 2014 if the economy picks up as the central bank expects.

The bank said it expects the US economy to grow between 2.3% and 2.6% in 2013. The Fed also said it expects the unemployment rate to drop to between 6.5% and 6.8% by the end of 2014 and inflation to edge closer to its 2% target.

Sentiment on the Aussie was further dampened after data Thursday showed that manufacturing activity hit a nine-month low in June.

China’s HSBC preliminary manufacturing purchasing managers’ index declined to 48.3 in June from 49.2 in May as new orders declined, indicating that the slowdown in manufacturing is worsening.

Meanwhile, in Australia, expectations for further rate cuts by the Reserve Bank of Australia were fuelled by the minutes of the bank's latest policy meeting.

The minutes of the RBA's June 4 meeting released earlier in the week showed that policymakers said the Aussie may drop further as export prices ease. They also repeated that the bank has room to cut interest rates further.

(COZ forex UK)