Forex - AUD/USD weekly outlook: October 24-28

Investing.com - The Australian dollar ended the week almost unchanged against its U.S. counterpart on Friday, trading close to a five-week high as hopes that European leaders will soon unveil a definitive solution to the region's debt crisis boosted demand for riskier assets.

AUD/USD hit 1.0117 on Tuesday, the pair's lowest since October 13; the pair subsequently consolidated at 1.0375 by close of trade on Friday, rising 0.49% over the week.

The pair is likely to find support at 1.0117, the low of October 18 and resistance at 1.0512, the high of August 25.

The Aussie found support on Friday, as risk sentiment strengthened after German officials mentioned the possibility of involving the International Monetary Fund in a plan to boost the powers of the euro zone's rescue fund, the European Financial Stability Facility.

European leaders gathered in Brussels over the weekend in order to continue talks on measures to recapitalize banks, to enhance the EFSF and to deal with Greece's sovereign debt. 

As no headline deal was expected to come out of Sunday's meeting, some leaders were hopeful that another euro zone summit on Wednesday would produce definitive results.

On Thursday, the National Australia Bank said its business confidence index fell to minus 4 in the third quarter from a reading of 5 the previous quarter. But the risk-related Aussie remained supported after the U.S. Philly Fed manufacturing index soared unexpectedly to 8.7% in October, after a 17.5 drop the previous month.

Earlier in the week, the minutes of the Reserve Bank of Australia's most recent policy meeting signaled a potential rate cut in the near future.

According to the report, RBA policymakers believed that "an improved inflation outlook, if confirmed by further data, would increase the scope for monetary policy to provide some support to demand, should that prove necessary."

Ahead of the coming week investors will be closely watching developments in the euro zone, amid hopes for a breakthrough on dealing with the deepening debt crisis in the region. Markets will also be eyeing Thursday’s U.S. data on third quarter economic growth in order to gauge the strength of the U.S. recovery. In addition, Australia is to produce government data on producer and consumer price inflation.

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

Monday, October 24

Australia is to produce government data on producer price inflation, which is a leading indicator of consumer inflation.

Tuesday, October 25

Australia is to publish an index of leading economic indicators, designed to forecast the future direction of the economy.

Later Tuesday, the U.S. is to publish industry data on house price inflation as well as a report on consumer confidence, which is a leading indicator of consumer spending.

Wednesday, October 26

Australia is to publish official data on consumer price inflation, which accounts for the majority of overall inflation.

The U.S. is to release government data on durable goods orders, a leading indicator of production. The country is also to publish official data on new home sales and crude oil stockpiles.

In the euro zone, European Union leaders are to hold a one-day economic summit to discuss measures to stem the spreading debt crisis in the single-currency bloc.

Thursday, October 27

The U.S. is to publish preliminary data on third quarter gross domestic product, the broadest measure of economic activity and the primary gauge of the economy's health, as well as the GDP price index, the broadest measure of inflation.

The country is also to publish its weekly data on initial jobless claims and an industry report on pending home sales.

Friday, October 28

The U.S. is to round up the week with a flurry of data on personal income, personal spending, employment costs and consumer prices.

Meanwhile, the University of Michigan is to publish revised data on consumer sentiment and inflation expectations.