AUD/USD – Aussie Remains Under Pressure

AUD/USD remains under pressure as we begin the new trading week. In Monday’s European session, the pair was trading in the upper-1.02 range. The Aussie lost about 140 points last week, in large part due to a disappointing Chinese GDP reading. Early on Tuesday, Australia will release the CB Leading Index. The markets will also be keeping a close watch on Chinese data, with the release of Flash Manufacturing PMI. In the US, today’s highlight is Existing Home Sales.

The G20 wrapped up its meeting of finance ministers and central bankers in Washington. As expected, the G20 did not reprimand Japan over its monetary policies, which have resulted in the yen taking a tumble. Although Japan has faced a lot of criticism leveled against Japan, the G20 issued a very soft statement about monetary easing which didn’t mention any country by name. This clears the way for the Bank of Japan to continue its aggressive easing policy. The yen responded by dropping to four-year lows, as the elusive 100 level is almost within reach.

The markets will be hoping for a turnaround in US numbers, after another dismal week. Thursday saw more key releases and more bad news, as employment and manufacturing numbers disappointed. Unemployment Claims came in at 352 thousand, higher than the estimate of 349 thousand. The Philly Fed Manufacturing Index dropped from 2.0 points to 1.3 points, nowhere near the estimate of 2.7 points. The weak numbers have dogged the US since March, and are raising red flags about the extent of the US recovery.

Last week, the IMF released a report on global growth, and the numbers were mostly negative. The IMF downgraded its 2013 forecast for global growth from 3.5% to 3.3%, and lowered the 2014 prediction from 4.1% to 4.0%. The report also cut its forecast on Chinese growth this year from 8.2% in January to 8.0%. The downgrade could hurt the Australian dollar, as China is Australia’s number one trading partner.

 

AUD/USD for Monday, April 22, 2013

Forex Rate Graph 21/1/13
 

AUD/USD April 22 at 11:45 GMT

1.0266 H: 1.0308 L: 1.0252

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
1.0100 1.0174 1.0230 1.0298 1.0350 1.0424

 

AUD/USD remains under pressure. The pair dropped below the 1.03 line in the Asian session, and has dropped to the 1.0260 level. The pair is receiving support at 1.0230. This line could see pressure if the US dollar post more gains. There is stronger support at 1.0174. On the upside, 1.0298 is providing resistance. This line is protecting the 1.03 level. The next line of resistance is at 1.0350.

Current range: 1.0230 to 1.0298

Further levels in both directions:

  • Below: 1.0230, 1.0174, 1.01 and 1.008
  • Above: 1.0298, 1.0350, 1.0424, 1.0508 and 1.0568

 

OANDA’s Open Position Ratios

The AUD/USD ratio continues to move towards long positions. There has been strong movement in this direction in the past week. With the Aussie dropping sharply last week, this is likely due to many short positions being covered. Long positions now enjoy a dominant majority of the open positions, indicating that trader sentiment is biased to the Australian dollar reversing its downward trend.

 

AUD/USD Fundamentals

  • 12:30 US FOMC Member William Dudley Speaks
  • 14:00 US Existing Home Sales. Exp. 5.02M

 

*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.