AUD/USD – Surging Aussie Pushes Past 1.05

AUD/USD continues to climb higher, as the pair moved above the 1.05 in Wednesday trading. Weak Australian consumer confidence failed to dampen enthusiasm for the red-hot Australian dollar, which has risen almost two cents so far this week. In the US, the markets will be paying close attention as the Federal Reserve releases the minutes of the most recent FOMC meeting. Analysts will be looking to see if the Fed discussed ending its current round of quantitative easing earlier than expected.

The Australian dollar continues to surge against the US dollar, despite disappointing Australian data on Wednesday. Westpac Consumer Sentiment plunged 5.1%, its first decline in 2013. There was more bad news as China recorded a trade deficit, the first since March 2011. The Asian giant recorded a deficit of $0.9 billion, nowhere near the estimate of a surplus of $15.2 billion. However, at the same time, Chinese imports rose 14.1% compared to March 2012, well above the estimate of a 6.0% increase. As well, this was a sharp turnaround from the February reading, which showed a steep decline of 15.2%. Key Chinese data is often a market-mover for the Australian dollar, as China is Australia’s number one export partner.

Meanwhile, the RBA continues to warn that the high-flying Australian dollar is having negative repercussions on the Australian economy. Assistant Governor Christopher Kent included the strong dollar in a list of factors that is hurting economic growth. The RBA has lowered interest rates by 1.75% since 2011, but this has failed to stem the value of the currency.

The US continues to churn out disappointing numbers, and every key release over the past two weeks has fallen below expectations. The data comes from across the economy – manufacturing, housing, consumer confidence and employment numbers have all missed their estimates. Employment numbers were dismal, and have helped the euro post impressive gains against the US dollar. this week. Has the US recovery stalled? The US hasn’t released any key fundamentals so far this week. Unemployment Claims will be released on Thursday, and additional major releases are scheduled for Friday. If the US can turn things around and post some stronger numbers, we could see the dollar improve after losing ground to major currencies such as the euro and British pound.

AUD/USD for Wednesday, April 10, 2013

AUD/USD April 10 at 12:40 GMT

1.0528 H: 1.0539 L: 1.0475

AUD/USD Technical

AUD/USD continues to push upwards, and crossed above the 1.05 line earlier. The pair is facing resistance at 1.0568. This is followed by a resistance line just above the 1.06 level, at 1.0605. On the downside, the pair is receiving support at 1.0508. This weak line could be tested if the US dollar shows any improvement. There is stronger support at 1.0424.

Current range: 1.0508 to 1.0568.

Further levels in both directions:

• Below: 1.0508, 1.0424, 1.0334, 1.0230, 1.0174 and 1.0080
• Above: 1.0568, 1.0605 and 1.0697 and 1.0753

OANDA’s Open Position Ratios

The AUD/USD ratio continues to point to movement towards short positions. This is not consistent with the current movement of the pair, as the Australian dollar continues to post gains against the greenback. However, it could reflect an expectation that the rally may soon be over and we will see a downward correction. With the recent strong shift towards short positions, there is now a majority of short positions in the ratio, reflecting a slight bias towards the US dollar showing some improvement.

The Aussie is on a roll, and brushed past some very weak Australian consumer confidence data on Wednesday. Will the upward momentum continue? It’s been a quiet week in the US, which is releasing major events late this week. Depending on the strength of US numbers, we could see some change in the direction of AUD/USD.

AUD/USD Fundamentals

• 00:30 Australian Westpac Consumer Sentiment. Actual 5.1%.
• 14:30 US Crude Oil Inventories. Estimate 1.6M.
• 17:00 US 10-year Bond Auction.
• 18:00 US FOMC Meeting Minutes.
• 18:00 US Federal Budget Balance. Estimate -110.3B.

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