AUD/USD – Sharp Losses as US Data Disappoints

AUD/USD has dropped sharply in Wednesday trading. The pair has lost close to one cent, and was trading below the 1.03 line in the North American session. Weak US manufacturing and employment numbers helped push the Aussie lower. Later today, the Federal Reserve is in action, as the FOMC releases a statement. In Australia,  HIA New Home Sales jumped 4.2%, an excellent release after declining 5.3% in the April reading.

After a promising start to the week, the US fell back to its losing ways, with disappointing employment and manufacturing numbers. ADP Non-Farm Payrolls dropped to 119 thousand, well off the estimate of 154 thousand. The ISM Manufacturing PMI came in at 51.7 points, missing the estimate of 52.0 points. The weak numbers are weighing on the Australian dollar, as nervous investors stick with the safe-haven greenback. Meanwhile, the markets are keeping a close eye on the Federal Reserve, as the FOMC releases a statement at the end of a policy meeting. Policy makers are expected to maintain the current round of QE, which is US dollar negative. So, we could see some reaction from the currency markets following the FOMC release.

Will he or won’t he? This question is looming large, as the markets anxiously wait to see whether Mario Draghi and his colleagues at the ECB will press the trigger and lower in interest rates for the first time since last July. The Eurozone continues to stagnate with poor releases, highlighted by another record high for Eurozone Unemployment Rate, which edged to 12.1%, up from 12.0%. Speculation that the ECB will take action and lower rates is growing, and most analysts are expecting a cut in rates. All eyes will be on the ECB,  which will announce the new rate on Thursday. Whether the ECB takes action or leaves the rate as is, we could be in for some volatility in the currency markets.

 

AUD/USD for Wednesday, May 1, 2013

Forex Rate Graph 21/1/13
 

AUD/USD May 1 at 14:45 GMT

1.0275 H: 1.0382 L: 1.0280

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
1.0080 1.0174 1.0230 1.0350 1.0424 1.0508

 

AUD/USD has slumped in Wednesday trading, falling below the 1.03 line. The pair is receiving support at 1.0230. This line is weak, and could face pressure if the Aussie continues to drop. This is followed by a support level at 1.0174. On the upside, the pair is facing resistance at 1.0350. There is stronger resistance at 1.0424.

Current range: 1.0230 to 1.0350

 

Further levels in both directions:

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

 

OANDA’s Open Position Ratios

The AUD/USD ratio is not showing much movement on Thursday.  The pair has been anything but quiet, as the Aussie has posted sharp losses against the US dollar. The ratio continues to have a large majority of long positions, indicating a strong bias for the US dollar to post further gains.

The Australian dollar has taken a hit, as key US numbers on Wednesday were weak. We could see more movement today, as the FOMC releases a statement later in the day.

 

AUD/USD Fundamentals

  • 1:00 HIA New Home Sales. Actual 4.2%.
  • 3:25 Reserve Bank of Australia Governor Speaks Malcolm Edey Speaks.
  • 6:30 Australian Commodity Prices. Actual -6.5%.
  • 12:15 ADP Non-Farm Employment Change. Estimate 154K. Actual 119K.
  • 13:00 US Final Manufacturing PMI. Estimate 52.1 points. Actual 52.1 points.
  • 14:00 US ISM Manufacturing PMI. Estimate 51.0 points. Actal 50.7 points.
  • 14:00 US Construction Spending. Estimate 0.7%. Actual -1.7 points.
  • 14:00 US ISM Manufacturing Prices. Estimate 52.6 points. Actual 50.0 points.
  • 14:30 US Crude Oil Inventories. Estimate 1.2M. Actual 6.7M.
  • All Day: US Total Vehicle Sales. Estimate 15.2 M.
  • 18:00 US FOMC Statement.
  • 18:00 US Federal Funds Rate. Estimate <0.25%.

 

*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.