AUD/USD – Little Change after Positive Employment Data

AUD/USD is almost unchanged in Thursday’s European session, as the pair trades in the low-1.03 range. There was good news on the Australian employment front, as Employment Change increased sharply and the Unemployment Rate dropped.  However, business confidence was a disappointment. In the US, Crude Oil Inventories was within expectations. Today’s highlight is US Unemployment Claims. 

The Australian dollar has looked weak over the past two days. Although Australian employment numbers were sharp, the Aussie appears not to have taken notice, as AUD/USD continues to trade in the 1.0330 range. Employment Change bounced back from a dismal reading in January, as it posted a gain of 10.4 thousand. This easily exceeded the forecast of 5.8K. The Unemployment Rate also improved, dipping to 5.4% from 5.5%. Weak confidence in the economy continues to be a problem, as the NAB Quarterly Business Confidence indicator plunged to -5 points, its worst showing since mid-2011. Any economic recovery will have a tough time gaining traction without solid consumer and business confidence in the economy. In the US, Crude Oil Inventories came in at 2.6 million, just short of the market estimate of 2.7 million.

The markets will be in full gear on Friday, with key Australian and Chinese data on the schedule. The RBA will release its quarterly Monetary Policy Statement. Analysts are interested in the central bank’s take on the economy, which comes on heels of the decision to maintain current interest rates, at least for now. The markets will be paying close attention to Chinese Trade Balance and CPI figures. The Chinese economy has slowed, although economic growth is very high compared to that of Western countries. The markets are bracing for a significant downturn from both key releases, and the readings could have a significant effect on AUD/USD, as China is Australia’s most important trading partner.

 

AUD/USD for Thursday, February 7, 2013

Forex Rate Graph 7/2/13

AUD/USD February 7 at 12:10 GMT

1.0330 H: 1.0337 L: 1.0298

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
1.0031 1.0174 1.0268 1.0334 1.0376 1.0424

 

AUD/USD is trading quietly, as the proximate lines remain in place (S1 and R1 above). The resistance line at 1.0334 is under strong pressure from the pair. It was breached on Wednesday as the pair fell sharply, but has managed to stay in place. The next line of resistance is at 1.0376. On the downside, there is strong support at 1.0268. This line has not been tested since October 2012.

Current range: 1.0268 to 1.0334

Further levels in both directions:

  • Below: 1.0268, 1.0174, 1.0031 and 0.9947.
  • Above: 1.0334, 1.0376, 1.0424, 1.0473, 1.0530, 1.0605 and 1.0718

 

OANDA’s Open Position Ratios

The current trend in the AUD/USD ratio continues, with movement towards long positions. We are not seeing a similar move by the pair, although the Aussie has leveled off after Wdnesday’s sharp dive downwards. The movement in the ratio and the fact that most open positions are long, underscores strong trader expectation that the Australian dollar will recover and post gains against the greenback.

AUD/USD is subdued after dropping sharply on Wednesday. We could see stronger movement on Friday, with the release of key Australian and Chinese data.

AUD/USD Fundamentals

  • 00:30 Australian Employment Change. Estimate 5.8K. Actual 10.4K.
  • 00:30 Australian Unemployment Rate. Estimate 5.5%. Actual 5.5%.
  • 13:30 US Unemployment Claims. Estimate 361K.
  • 13:30 US Preliminary Non-Farm Productivity. Estimate -1.3%.
  • 14:30 US FOMC Member Jeremy Stein Speaks.
  • 15:30 US Natural Gas Storage. Estimate -135B.
  • 20:00 US Consumer Credit. Estimate 141.1B.

*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.