AUD/USD – Steady as Aussie Tests 1.03 Line

AUD/USD is steady in Monday trading. The pair has edged higher, and has crossed above 1.03 in the European session. In Australia, the new trading week started on the wrong foot, as New Motor Vehicle Sales declined, hitting a three-month low. US markets are closed for the Presidents Day h0liday on Monday.

In the US, UoM Consumer Sentiment and the Empire State Manufacturing Index looked sharp. Consumer Sentiment rose to 76.3 points, exceeding the estimate of 74.8 points. The Manufacturing Index jumped 10 points, well above the forecast of -2.1 points. The markets were pleased with the data, as both indicators have been struggling recently. These numbers come on the heels of excellent US employment data. If US indicators continue to point to an improving US economy, we could see the investors feel more comfortable purchasing riskier assets, such as the Australian dollar.

Currency manipulation was on the G-20 agenda, as the meeting concluded on the weekend. The talks were attended by finance ministers and central bank governors, and the final statement included a mild comment on the recent volatility in exchange rates. The leaders pledged not to “target our exchange rates for competitive purposes”, and to move more rapidly to market-determined exchange rate systems. The G-20 statement did not make reference to Japan, which has come under fire for monetary policies which have led to a free-fall in the value of the Japanese yen. G-20 leaders appear resigned to the yen continuing to slide, but do not want Japanese officials to make public statements which will pull down the currency. Thus, Japan’s major trading partners, although not pleased about the tumbling yen, have tacitly given Japan a green light to continue to stimulate its economy with further monetary easing measures and higher inflation, which will likely have a negative impact on the yen.

Australian Treasurer Wayne Swan, who attended the G-20 meeting, dismissed talk of a “currency war”, but conceded that the strong Australian dollar has had a negative effect on the economy, including exports, mining and tourism. The Australian dollar has lost ground in 2013, but has still gained about 6 percent against the greenback since mid-2012. Swan stated that he had no problem with Japanese stimulus packages, echoing the view of the G-20 that he strongly supported market-determined exchange rates. However, Japan is a major trading partner of Australia, and a weakening yen is not good news for the struggling Australian economy.

 

AUD/USD for Monday, February 18, 2013

Forex Rate Graph Monday, February 18, 2013

AUD/USD February 18 at 13:00 GMT

1.0313 H: 1.0315 L: 1.0275

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
1.0031 1.0174 1.0268 1.0334 1.0424 1.0568

 

AUD/USD has edged higher, and has pushed above the 1.03 line. The pair is facing weak resistance at 1.0334. This is followed by the line of 1.424. On the downside, 1.0268 is the next support level.

Current range: 1.0268 to 1.0334.

Further levels in both directions:

  • Below: 1.0268, 1.0174, 1.0031 and 0.9917.
  • Above: 1.0334, 1.0424, 1.0568, 1.0605, 1.0718 and 1.0874.

 

OANDA’s Open Position Ratios

The AUD/USD ratio is showing activity,with a strong movement towards long positions., There has been a lot of activity recently in this direction, and the long positions now command a solid majority in the ratio. The activity in the ratio indicates an expectation for the Australian dollar to move higher.

AUD/USD is trading very close to the 1.03 line. With US markets closed on Monday, and only one Australian release, we could see a quiet start to the week from AUD/USD.

 

AUD/USD Fundamentals

  • 00:30 Australian New Motor Vehicle Sales. Actual 2.4%.

 

*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.