AUD/USD – Steady Before US GDP Numbers

AUD/USD is steady in Friday’s European session. The pair was trading in the high-1.02 level, after briefly breaking through the 1.03 line before retracting back to 1.02 territory.  In the US, there was some relief from the string of bad numbers, as Unemployment Claims came in below expectations. On Friday, the US will release Advance GDP and UoM Consumer Sentiment. There are no Australian releases on Friday. 

Although the Australian dollar has not had a great week, we could see the currency bounce back, as the major central banks look to increase their easing measures. This is most apparent in the aggressive policies of the Bank of Japan, but is also reflective of the Federal Reserve, the Bank of England, and to some extent, the ECB. This makes the Aussie quite attractive, with interest rates in Australia at 3.0%. As one analyst succinctly noted regarding the central banks’ easing bias- “money needs to go somewhere”.

In the Eurozone, there is growing speculation that the ECB could press the trigger and lower rates. The Eurozone continues to stagnate with poor releases, and has its hands full with crises in Cyprus (bailout fiasco) and Italy (political gridlock). Speculation that the ECB will take action is growing in the markets. Goldman Sachs released a statement on Thursday, stating that it expects a 0.25% cut when the ECB meets next week. The prestigious firm also downgraded Eurozone growth for 2013, from -0.5% to -0.7%. The ECB will set rates next Thursday, but the possibility of a rate cut will likely to preoccupy the markets during the course of the week. 

The US has been having its share of problems as well. Since late March, almost all key releases have pointed  downwards, indicating weakness in a wide range of economic sectors. On Wednesday, Core Durable Goods, a key manufacturing event, declined by 1.4%, well below the estimate of a 0.5% gain. There was better news on Thursday, as Unemployment Claims dropped to 339 thousand, beating the estimate of 352 thousand. However, the markets remain concerned about the pace and  extent of the US recovery, and will want to see additional releases pointing upwards.

 

AUD/USD for Friday, April 26, 2013

Forex Rate Graph 21/1/13
 

AUD/USD April 26 at 12:10 GMT

1.0272 H: 1.0336 L: 1.0264

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
1.0080 1.0174 1.0230 1.0298 1.0350 1.0424

 

AUD/USD pushed above the 1.03 level in Friday’s Asian session, but was unable to sustain the momentum and retracted. On the upside, the pair faces resistance at 1.0298. This line was breached earlier today, and could face more pressure. There is stronger resistance at 1.0350. On the downside, there is support at 1.0230. This is followed by a support level at 1.0174. This line has held firm since early March.

Current range: 1.0230 to 1.0298

Further levels in both directions:

  • Below: 1.0230, 1.0174, 1.0080 and 1.00.
  • Above: 1.0298, 1.0350, 1.0424, 1.0508 and 1.0568

 

OANDA’s Open Position Ratios

The AUD/USD ratio continues to show little change in Friday trading. This is consistent with what we are seeing from the pair, which has shown little net movement. If the ratio shows more activity, this could  be a sign that the pair will break out from it narrow range.

AUD/USD is trading quietly in the European session. With the US releasing key GDP data later today, we could see the pair show some movement if the reading is not in line with the market estimate.

 

AUD/USD Fundamentals

  • 12:30 US Advance GDP. Estimate 3.1%.
  • 12:30 US Advance GDP Price Index. Estimate 1.3%.
  • 13:55 US Revised UoM Consumer Sentiment. Estimate 73.3 points
  • 13:55 US Revised UoM Inflation Expectations.

 

*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.