AUD/USD – Steady after Solid Australian Business Confidence Data

AUD/USD is steady in Tuesday trading, following Monday’s quiet activity. The pair continues to trade in the mid-1.02 range. There was some good news out of Australia, as NAB Business Confidence looked sharp. Consumer Sentiment will be released later on Tuesday. In the US, today’s major release is the Federal Budget Balance. The markets will be listening closely as President Obama delivers his State of the Union Address later on Tuesday.

AUD/USD has been quiet this week, and once again, solid Australian economic data failed to give the Aussie an upward push. NAB Business Confidence rose to 3 points. This marked the first time that the important business indicator has produced back-to-back readings in positive territory. The markets will be hoping that Consumer Sentiment can follow suit. Strong business and consumer confidence are essential for an economic recovery, and positive numbers would improve market sentiment and could boost the struggling Australian dollar. 

The Australian housing market is going through rough times, and Australian banks have cut their mortgage rates in response. Will Australian consumers bite and take advantage of cheaper home loans? The RBA reduced rates last October and December, but borrowing levels have not increased. The central bank is unlikely to cut rates in the near future, as unemployment has been rising and inflation is weak. If potential home owners don’t open their wallets, the Australian economy will have a tough time getting back on track. With the RBA giving the economy a rather poor grade, the Australian dollar could lose more ground.

The G-20 meeting will take place later this week in Moscow, and the markets will be keeping a close eye on the important international gathering. A hot topic on the agenda will be the issue of exchange rates. There has been a lot of volatility in currency rates lately – most notably, the sinking yen and the high-flying euro. There is mounting concern about currency wars, as countries increasingly rely on monetary policy to kick-start their flagging economies. Japan is facing criticism about its economic platform, which has helped the yen tumble in a hurry. The yen has shed 20% of its value since October, as the government continues with aggressive monetary stimulus to combat deflation and breathe life into the sluggish Japanese economy. Meanwhile, the Institute of International Finance, which is comprised of leading banks and financial institutions, has urged the G-20 to take steps to avoid the “possible discord on exchange rates”. However, given the need to reach a consensus, analysts expect any statement on currencies from the G-20 to be mild in nature.

 

AUD/USD for Tuesday, February 12, 2013

Forex Rate Graph Tuesday, February 12, 2013

AUD/USD February 12 at 13:00 GMT

1.0248 H: 1.0273  L: 1.0228

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.9959 1.0031 1.0174 1.0268 1.0334 1.0424

 

AUD/USD remains under pressure, as its struggles in the 1.0250 range. The pair is facing resistance at 1.0268. This line is followed by 1.0334, which has strengthened is the pair trades at lower levels. On the downside, there is strong support at 1.0174 ,which has held firm since early October. This is followed by support at 1.0031, which is protecting the all-important parity line.

Current range: 1.0174 to 1.0268

Further levels in both directions:

  • Below: 1.0174, 1.0031 and 0.9959 and 98.47
  • Above: 1.0268, 1.0334, 1.0424, 1.0473, 1.0530 and 1.0605

 

OANDA’s Open Position Ratios

The AUD/USD ratio continues to point to strong movement in favor of long postions, which now have sizable majority of the open positions. This movement is not reflected in the current move by the currency pair, as the Australian dollar continues to drop to lower levels. The movement in the ratio and the fact that most open positions are long, underscores strong trader expectation that we will see a correction to the present downward movement by AUD/USD.

AUD/USD continues to face strong pressure from the US dollar, and was unable to capitalize on positive business confidence numbers out of Australia. Will the downward movement continue? The markets continue to be concerned about the Australian economy, and the this negative sentiment could be bad news for the struggling Aussie. 

AUD/USD Fundamentals

  • 00:30 Australian NAB Business Confidence. Actual 3 points.
  • 12:30 NFIB Small Business Index. Estimate 89.0 points. Actual 88.9 points.
  • 16:30 FOMC Member Esther George Speaks.
  • 19:00 US Federal Budget Balance. Estimate -4.6B.
  • 23:30 Australian Westpac Consumer Sentiment.

 

*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.