The Australian dollar ended Friday’s session modestly higher against its
U.S. counterpart, amid hopes that U.S. political leaders would reach a
compromise to raise the country's borrowing limit and avert a sovereign
debt default.
AUD/USD
hit 0.9485 on Friday, the pair’s highest since September 19; the pair
subsequently consolidated at 0.9466 by close of trade on Friday, up
0.13% on the day and 0.35% higher for the week.
The pair is likely to find support at 0.9390, the low from October 10 and resistance at 0.9524, the high from September 19.
Investor
confidence was boosted as House Republicans and the Obama
administration began a second day of negotiations on a deal to reopen
the government and raise the U.S. debt ceiling for six weeks.
The
federal government has been shut down since October 1. Lawmakers must
raise the national borrowing limit by October 17 or run the risk of a
U.S. sovereign debt default.
Concerns over economic impact of the
U.S budget and debt ceiling impasse fuelled expectations that the
Federal Reserve will further delay plans to start phasing out its USD85
billion a month asset purchase program.
Wednesday’s minutes of
the Fed’s September meeting said the decision not to begin tapering
stimulus was a "close call," with all but one voting member opting to
leave the program unchanged.
Data released on Friday showed that
U.S. consumer sentiment fell to the lowest level in nine months in
October, as concerns over the impact of the government shutdown weighed.
The
University of Michigan’s consumer sentiment index declined to 75.2 from
a final reading of 77.5 in September, and below expectations for a
reading of 76.0.
Meanwhile, the Aussie remained supported as
traders saw a reduced chance the Reserve Bank of Australia will lower
interest rates again in the near-term.
Official data released on
Thursday showed that Australia's unemployment rate ticked down to 5.6%
last month, from 5.8% in August. Analysts had expected the unemployment
rate to remain unchanged in September.
The report also said that
the number of employed people in Australia rose by 9,100 in September,
below expectations for a 15,000 increase, after a downwardly revised
10,200 decline the previous month.
In the week ahead, investors will continued to closely monitor political developments in Washington.
Market
players also looked ahead to a raft of Chinese economic data, including
reports on inflation, gross domestic product, industrial production and
retail sales.
Official data released on Saturday showed that
China’s trade surplus narrowed sharply in September as exports declined
unexpectedly, fuelling concerns over growth prospects in the world’s
second-largest economy.
China’s trade surplus narrowed to
USD15.2 billion last month from a surplus of USD28.6 billion in August,
compared to estimates for a surplus of USD27.7 billion.
Chinese exports fell 0.3% from a year earlier, defying expectations for a 6% increase and following a 7.2% gain in August.
China is Australia’s largest trade partner.
Ahead
of the coming week, Investing.com has compiled a list of these and
other significant events likely to affect the markets. The guide skips
Wednesday as there are no relevant events on this day.
Monday, October 14
Australia is to release data on home loans, an important indicator of demand in the housing sector.
China is to publish data on consumer inflation, which accounts for the majority of overall inflation.
Meanwhile, markets in the U.S. are to remain closed for the Columbus Day holiday.
Tuesday, October 15
The
Reserve Bank of Australia is to publish its monetary policy meeting
minutes, which contain valuable insights into economic conditions from
the bank’s perspective.
The U.S. is to release a report on manufacturing activity in the Empire state.
Thursday, October 17
Australia is to publish a private sector report on business confidence, an important economic indicator.
The
U.S. is to publish the weekly government report on initial jobless
claims, as well as data on manufacturing activity from the Philly Fed.
Friday, October 18
China
is to release data on third quarter gross domestic product, the
broadest indicator of economic activity and the leading measure of the
economy’s health, in addition to data on industrial production.
