AUD/USD bulls eye the 61.8% golden ratio for the week ahead

At 0.7327, AUD/USD ended the day on Friday higher by some 0.57% and had traveled from a low of 0.7276 reaching a high of 0.7335 by the North American close. The US dollar gave back territory on Friday as consumer sentiment dived for fears of runaway inflation. The University of Michigan survey showed sentiment in November fell to its lowest level in a decade.

The earlier data from the week in US inflation drove fears that surging inflation will inevitably cut into households' living standards. Moreover, the markets are anticipating that the Federal Reserve will have to raise interest rates sooner than expected. Against a basket of its rivals, the US dollar index DXY was down 0.03% at 95.122 by the close of play, above the lows of the day 94.997 that were made in response to consumer sentiment. However, it had risen to its highest level since July 2020 at 95.265.

The week ahead

In a lack of domestic data, to start the week off, traders will be looking to China for clues as to how the nation is recovering. However, analysts at TD Securities argued that ''October's data slate is likely to reveal a further softening in momentum. As reflected in the October NBS PMI, a host of supply pressures have hurt manufacturers' sentiment and weighed on output. October is seasonally a strong month for spending, but retail sales will likely be impacted by China's "zero-tolerance" COVID policy, which has led to lockdowns across many provinces.''

What Aussie traders do have with respect to national data for the week ahead will come in the form of the Reserve Bank of Australia meeting minutes, although it is unlikely to give us anything new. On the other hand, the RBA Governor Phillip Lowe will speak on "Recent Trends in Inflation" and his view on medium-term inflation should be keenly followed given the jump in Q3 inflation and inflation pressures globally running hotter. ''Wage growth is unlikely to pick up markedly over the quarter as the economy likely experienced a sharp contraction with both NSW and VIC in a prolonged lockdown in Q3,'' the analysts at TD Securities explained.

AUD/USD technical analysis

AUD/USD has trended lower since the start of the month but is in the process of an upside correction according to the daily chart and is on track for a test of the 38.2% Fibonacci retracement level for the open. This is located at 0.7336 and a pip higher than the highs of Friday. 

The price, however, would be expected to linger for longer in a corrective phase and target the prior lows that have a confluence with the 61.8% Fibo around 0.7370 which puts 0.7380 on the map for the week ahead.