AUD/USD – Lower as Aussie Woes Continue

AUD/USD is steady, as the pair continues to trade in the mid-1.02 range in Friday trading.  early in the North American session. The Australian dollar has now lost over one cent since Wednesday. The currency has taken a hit downwards as the markets reacted negatively to a weak release from Australian Building Permits. Australian import prices fell from 0.3% to 0.0%, but this was enough to beat the estimate of -0.5%. AIG Services Index will be released later on Thrursday. In the US, there was good news as the Trade Balance and Unemployment Claims beat expectations.

It’s been a turbulent week for US releases. Wednesday was a bust, as 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. However, Thursday’s releases looked much better. The Trade Deficit narrowed  to $38.8 billion, well below the estimate of $42.1 billion. Unemployment Claims fell to 324 thousand, easily beating the estimate of 346 thousand.

Anyone who was expecting some dramatic news out of the Fed on Wednesday was sorely disappointed. The FOMC policy statement on Wednesday said little, as the Fed basically noted that it wasn’t willing to take further steps, despite signs of weakness in the US economy. There was no indication that the Fed would make any changes (higher or lower) to its current QE program of purchasing $85 billion in assets each month. The Fed did criticize the government’s economic policy, stating that current fiscal policy was restraining economic growth. Meanwhile, the continues to struggle with weak numbers, and Wednesday’s ADP Non-Farm Payrolls was a bust. The key indicator dropped to 119 thousand, nowhere near the forecast of 154 thousand. ISM Manufacturing PMI came in at 50.7 points, missing the estimate of 51.0 points. We’ll get a better picture of the US employment picture as the US releases Unemployment Claims on Thursday, followed by official US Non-Farm Payrolls on Friday.

Under the new leadership of Governor Haruhiko Kuroda, the Bank of Japan has been pushing full steam ahead with aggressive monetary easing, but it seems that not all policy makers share his enthusiasm. The BOJ released the minutes of its most recent policy meeting. The minutes pointed to concern by some policy board members that the increase in QE could have a negative impact on financial markets and discourage bank lending. However, given that Prime Minister Abe is a strong supporter of more easing, we can expect the BOJ to continue its present QE program until it sees more inflation in the Japanese economy.

 

AUD/USD for Thursday, May 2, 2013

Forex Rate Graph 21/1/13
 

AUD/USD May 2 at 13:40 GMT

1.0250 H: 1.0283 L: 1.0223

 

AUD/USD Technical

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

 

AUD/USD has posted modest losses in Thursday trading, after a sharp drop on Wednesday. The pair continues to receive support at 1.0230. This line has weakened, and was briefly breached earlier today. It could continue to see action if the Aussie loses more ground. This is followed by a support level at 1.0174. On the upside, the pair is facing resistance at 1.0350. This line has strengthened as the pair trades at lower levels.

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 ratio continues to have a large majority of long positions, indicating a strong bias for the US dollar to post further gains. We are currently seeing this reflected by the pair, as the Aussie continues to lose ground against the US currency.

The Australian dollar continues to look weak, as it struggles against the US dollar, trading in the mid-1.02 range. Thursday’s North American session could be a quiet one, with the US having already released the day’s major events. We could see more movement on Friday, as Australia releases PPI and the US releases key employment data.

 

AUD/USD Fundamentals

  • 1:30 Australian Building Approvals. Estimate 1.2%. Actual -5.5%.
  • 1:30 Australian Import Prices. Estimate -0.5%. Actual 0.0%.
  • 11:30 US Challenger Job Cuts. Actual -6.0%
  • 12:30 US Trade Balance. Estimate -42.1B. Actual -38-8B.
  • 12:30 US Unemployment Claims. Estimate 346K. Actual 324K.
  • 12:30 US Preliminary Non-Farm Productivity. Estimate 1.8%. Actual 0.7%.
  • 12:30 US Preliminary Unit Labor Costs. Estimate 0.8%. Actual 0.5%.
  • 14:30 US Natural Gas Storage. Estimate 27B.
  • 23:30 Australian AIG Services Index

 

*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.