AUD/USD – Plummets after Weak Chinese GDP

The Australian dollar started the week on the wrong foot, as AUD/USD dropped over one cent in Monday’s European session, and was struggling to remain in 1.04 territory. The pair took a hit as Chinese GDP missed the estimate. Australian Home Loans rebounded nicely, gaining 2.0%. This beat the estimate of 1.6%. In the US, it’s a quiet day, with just two releases. The markets will be keeping an eye on the Empire State Manufacturing Index.

The Australian dollar looked sharp last week, but the upward momentum was nowhere to be found as AUD/USD has dropped sharply to begin the trading week. The pair reacted negatively to a disappointing GDP reading out of China, Australia’s most important trading partner. The key indicator climbed 7.7%, but this was below the estimate of 8.0%, raising concerns about a slowdown in Asia’s largest economy.

Bank of Japan governor Haruhiko Kuroda said on Monday that Japan’s financial system was stable, and that the BOJ could reach its target of 2% inflation in less than two years. He added that the economy is starting to improve, with greater demand domestically as well as from Japan’s trading partners. The BOJ has embarked on an aggressive program to eliminate deflation, and has greatly expanded its quantitative easing program, purchasing JPY7.5 trillion yen of long-term government bonds each month. Meanwhile, the yen was precariously close to the 100 level last week, but has now retracted.

The US released a host of data on Friday, and the grim news continued. After a solid Unemployment Claims reading on Thursday, there was hope that the US would rebound from a string of dismal releases, but the wheels just fell off the cart on Friday. Core Retail Sales and Retail Sales both declined by 0.4%. PPI dropped 0.6%, and UoM Consumer Sentiment wrapped up an awful week. The key consumer indicator came in at 72.3 points, way off the estimate of 79.1 points. The continuing weak numbers are bound to raise serious concerns about the extent of the recovery, as the US has churned out weak numbers since late March. 

 

AUD/USD for Monday, April 15, 2013

Forex Rate Graph 21/1/13
 

AUD/USD April 15 at 11:10 GMT

1.0411 H: 1.0524 L: 1.0395

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
1.0230 1.0298 1.0350 1.0424 1.0508 1.0568

 

AUD/USD has started off the week with sharp losses, following weak Chinese numbers. The pair is receiving support at 1.0350. This is followed by a support line at 1.0298. On the upside, there is weak resistance at 1.0424. This line could be tested if the Australian dollar shows any signs of recovery. This is followed by stronger resistance at 1.0508. 

Current range: 1.0350 to 1.0424.

Further levels in both directions:

  • Below: 1.0350, 1.0298, 1.0230 and 1.0174.
  • Above: 1.0424, 1.0508, 1.0568, 1.0605, 1.0718, 1.0874 and 1.0961.

 

OANDA’s Open Position Ratios

The AUD/USD ratio is showing strong movement towards long positions in the Monday session. With the Aussie posting sharp losses, the movement in the ratio is likely due to many short open positions being closed. Long positions still retain a majority of the open positions in the ratio.

AUD/USD has taken a tumble, and has shed over a cent in Monday trading. Will the downward movement continue? With a quiet day in the US, we can expect the pair to settle down and remain close to the 1.04 line.

 

AUD/USD Fundamentals

  • 1:30 Australian Home Loans. Estimate 1.6%. Actual 2.0%.
  • 12:30 US Empire State Manufacturing Index. Estimate 7.2 points
  • 13:00 US TIC Long-Term Purchases. Estimate 41.3B.
  • 14:00 US NAHB Housing Market Index. Estimate 45 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.