Forex - AUD/USD weekly outlook: January 12 - 16

Investing.com - The Australian dollar rallied 1% against its U.S. counterpart on Friday, after a surprise drop in U.S. hourly wages dampened expectations for a rise in U.S. interest rates.

AUD/USD fell to 0.8031 on Wednesday, the pair's lowest since July 2009, before recovering to subsequently consolidate at 0.8202 by close of trade on Friday, up 0.99% for the day and 1.43% higher for the week.

The pair is likely to find support at 0.8031, the low from January 7, and resistance at 0.8215, the high from December 31.

The Labor Department reported that the U.S. economy added 252,000 jobs in December, above expectations for jobs growth of 240,000.

The unemployment rate ticked down to a six-and-a-half year low 5.6% from 5.8% in November. Economists had forecast a decline to 5.7%.

But according to the data, average earnings fell by 0.2% in December, missing expectations for a 0.2% increase and were up by only 1.7% from a year earlier.

The drop in average earnings prompted investors to take profits in the dollar, as markets pushed back expectations for the first hike in U.S. interest rates to late-2015 from mid-2015 before the report.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.39% to 92.18 late Friday, off the 12-year peaks of 92.76 reached in the previous session.

Meanwhile, in Australia, data on Friday showed that retail sales rose 0.1% in November, disappointing expectations for an increase of 0.2%, after a 0.4% gain in October.

Also Friday, China said that consumer prices rose 1.5% year-on-year, just above expectation of 1.4% and producer prices fell 3.3%, narrowly more than expected.

The disappointing data fuelled fears that China will miss its annual growth target of 7.5% and added to speculation that the government will need to roll out fresh stimulus measures to avert a sharper slowdown.

The Asian nation is Australia's largest trade partner.

In the week ahead, markets will be looking ahead to Wednesday’s report on U.S. retail sales, as well as Friday’s reports on consumer sentiment and factory output, for further indications on the strength of the economy.

Australian employment data scheduled for Thursday will also be closely-watched.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, January 12

Australia is to release data on home loans.

In the U.S., Atlanta Federal Reserve President Dennis Lockhart is to speak.

Tuesday, January 13

China is to publish a report on the trade balance.

Wednesday, January 14

The U.S. is to produce data on retail sales, in addition to reports on import prices and business inventories.

Thursday, January 15

Australia is to release data on the change in the number of people employed and the unemployment rate.

The U.S. is to publish the weekly report on initial jobless claims as well as data on producer prices and manufacturing activity in the Philadelphia region.

Friday, January 16

The U.S. is to round up the week with a report on industrial production and preliminary data on consumer sentiment.