Investing.com - The Australian dollar weakened against its U.S. counterpart on Friday, as demand for the greenback remained supported after the Federal Reserve announced plans to further taper its monthly bond-buying program.
AUD/USD fell to 0.8694 on Friday, the pair’s lowest since January 27, before subsequently consolidating at 0.8752 by close of trade, down 0.5% for the day but 0.78% higher for the week.
The pair is likely to find support at 0.8694, Friday’s session low and resistance at 0.8824, Friday’s high.
On Wednesday, the Fed said it would scale back its monthly asset purchase program by another USD10 billion to USD65 billion a month, citing improvements in the labor market.
The central bank said it will keep a close eye on economic indicators before deciding to wind down its stimulus program even further.
Data released on Thursday showed that the U.S. economy grew 3.2% in the fourth quarter, in line with expectations.
On Friday, U.S. data showed that consumer spending rose 0.4% in December, above expectations for an increase of 0.2%.
Concerns over a slowdown in China’s manufacturing sector and ongoing turmoil in emerging markets also weighed on growth-linked assets, such as the Aussie.
The Australia dollar fell sharply against the yen on Friday, with AUD/JPY plunging 1.08% to settle at 89.38 at the close.
Data from the Commodities Futures Trading Commission released Friday showed that speculators increased their bearish bets on the Australian dollar in the week ending January 28.
Net shorts totaled 65,723 contracts, up 1.7% from the previous week’s total of 64,584 net shorts.
In the week ahead, investors will be keenly anticipating Friday’s U.S. nonfarm payrolls report for January after December’s report showed that the economy added far fewer jobs than expected.
An interest rate decision by Reserve Bank of Australia will also be in focus.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, February 3
Australia is to produce data on building approvals, a leading indicator of future construction activity.
In the U.S., the Institute of Supply Management is to produce data on manufacturing activity, a leading economic indicator.
Tuesday, February 4
The RBA is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.
The U.S. is to produce data on factory orders, a leading indicator of production.
Wednesday, February 5
The U.S. is to release the ADP report on private sector job creation, which leads the government’s nonfarm payrolls report by two days. Meanwhile, the ISM is to publish a report service sector activity.
Thursday, February 6
Australia is to release data on retail sales and the trade balance, the difference in value between imports and exports. The nation is also to release private sector data on business confidence.
The U.S. is to publish the weekly report on initial jobless claims as well as data on the trade balance.
Friday, February 7
The RBA is to publish its monetary policy statement, which outlines economic conditions and the inflation outlook from the bank’s perspective.
The U.S. is to round up the week with the closely watched government data on nonfarm payrolls and the unemployment rate.