AUD/USD – Edges Higher as Aussie Business Confidence Surges

AUD/USD has posted modest gains, following an excellent Business Confidence release. However, the CB Leading Index was weak, posting a slight decline. In the US, economic releases continue to paint a mixed picture. Durable Goods Orders data was positive, but Pending Homes Sales dropped sharply. Today’s key release is US CB Consumer Confidence. AUD/USD was trading in the 1.0450 range, and has managed to recover some of its recent sharp losses.

Taking a look at economic releases, US Core Durable Goods Orders posted a lower gain than in the previous reading. However, the rise of 1.3% easily beat the estimate of 0.8%. Durable Goods Orders looked even better, jumping 4.6%. This crushed the estimate of a 1.8% gain. The markets were pleased with the strong manufacturing data, but the housing numbers that followed were a big disappointment. Last week, New Home Sales dipped to 369 thousand units, way below the estimate of 387 thousand. This shocked the markets, which had anticipated a modest gain of 0.5%. Pending Home Sales fared no better, plunging by 4.3%. This was the indicator’s worst showing since last May. The two key housing indicators points to weakness in the US housing industry, a critical component for economic growth. The bumpy US recovery will continue to limp along if these numbers don’t improve soon. In Australia, NAB Business Confidence surged, climbing up to 3 points. This was an impressive turnaround from the December reading, which was deep in negative territory, at -9 points. However, the CB Leading Index looked weak, as the index posted a decline of 0.2%.This important indicator has recorded only one gain since August.

The markets will be keeping an eye on developments in Washington, as the Federal Reserve holds a two-day policy meeting. The Fed has not been in the headlines lately, but is busy at work, as it increased its purchases of securities in January from $40 billion to $85 billion. This has pushed the Fed’s balance sheet to a record $3 trillion. Despite these measures, the US recovery remains slow, and unemployment is still high at 7.8%. The markets will be paying close attention to the Fed’s take on the economy, with the markets hoping to hear a hint about when the Fed might end its current round of QE. Minutes from the most recent FOMC pointed to members being divided between those in favor of ending QE in mid-2013, versus those who wish to continue it to a later date. Any unexpected announcements from the Fed meeting could affect the movement of AUD/USD.

 

AUD/USD for Tuesday, January 29, 2013

Forex Rate Graph 21/1/13

AUD/USD January 28 at 13:40 GMT

1.0445 H: 1.0463 L: 1.0419

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
1.0334 1.0376 1.0424 1.0473 1.0568 1.0605

 

AUD/USD has managed to stop its sharp slide, as the Aussie is edging higher in Tuesday trading. On the upside, 1.0473 is providing weak resistance. This line could face pressure if the pair shows further improvement. This is followed by resistance at 1.0508. On the downside, 1.0424 is providing weak support. This is followed by strong support at 1.0376. This line has not been tested since late December.

Current range: 1.0424 to 1.0473.

Further levels in both directions:

  • Below: 1.0424, 1.0376, 1.0334, 1.0230 and 1.0174 and 1.0031.
  • Above: 1.0473, 1.0568, 1.0605, 1.0718, 1.0874 and 1.0961.

 

OANDA’s Open Position Ratios

Monday’s movement in the AUD/USD ratio has subsided, reflecting little activity by the currency pair. Most open positions are long, indicating a bias towards the Aussie making more headway against the US dollar. AUD/USD tends not to drift for very long, so traders can expect movement from the pair and in the ratio as well.

AUD/USD is enjoying some upward movement following recent losses which pushed it below the 1.04 level. Today’s main event is the Federal Reserve policy meeting. We could see some fluctuation if there are any interesting developments from the Fed meeting.

 

AUD/USD Fundamentals

  • 00:30 Australian NAB Business Confidence. Actual 3 points.
  • 14:00 US S&P/CS Composite-20 HPI. Estimate. 5.5%.
  • 15:00 US CB Consumer Confidence. Estimate 64.8 points.

 

*Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.