Forex - AUD/USD weekly outlook: June 1 - 5

Investing.com - The Australian dollar declined against its U.S. counterpart on Friday to end close to a seven-week low amid growing prospects the Federal Reserve was on track to raise interest rates later this year.

AUD/USD shed 0.09% on Friday to end at 0.7641. A day earlier, the pair slumped to 0.7617, a level not seen since April 15.

For the week, the pair lost 2.41%, the second straight weekly decline, amid growing expectations that the Federal Reserve would raise interest rates after the summer.

Official data released Friday showed that the U.S. economy contracted 0.7% in the first three months of 2015, compared to an initial estimate of growth of 0.2%. The downward revision was broadly in line with analysts' expectations.

Despite the disappointing reading, most market experts expect the U.S. economy to rebound in the second quarter, as transitory factors recede.

Economic data released in the past week, including reports on inflation, new home sales, business investment and consumer confidence all indicated that the economy is gaining momentum after a slowdown in the first quarter, supporting the case for higher interest rates later this year.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, slid 0.2% on Friday to end at 96.94, moving further way from Wednesday’s five-week peak of 97.88.

Despite Friday's losses, the dollar still rose 0.9% on the week after Federal Reserve Chair Janet Yellen said last week that the central bank expects to start raising interest rates later this year if the economy continues to improve as expected.

In the week ahead, investors will be focusing on Friday's nonfarm payrolls report for May, for fresh indications on the strength of the economy and the timing of a U.S. rate increase.

Market players will also be focusing on the outcome of a policy meeting of the Reserve Bank of Australia on Tuesday.

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

Monday, June 1

China is to release official data on manufacturing and service sector growth as well as the final reading of the HSBC manufacturing index. The Asian nation is Australia's largest trade partner.

Australia is to produce data on building approvals.

Later in the day, the Institute of Supply Management is to release data on manufacturing activity.

Tuesday, June 2

The Reserve Bank of Australia is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision.

Australia is also to release data on the current account.

Later in the day, the U.S. is to report on factory orders.

Wednesday, June 3

Australia is to release data on first quarter economic growth.

The U.S. is to release the ADP non-farm payrolls report, which looks at private sector jobs growth, while the ISM is to report on U.S. service sector activity. The country will also release data on the trade balance.

Thursday, June 4

Australia is to publish report on retail sales and the trade balance.

The U.S. is to release the weekly report on initial jobless claims.

Friday, June 5

The U.S. is to round up the week with the closely watched government report on nonfarm payrolls, the unemployment rate and average earnings.