AUD/USD – Gains After Strong Aussie Employment Numbers

AUD/USD has rebounded after some sharp losses early in the week. The pair took advantage of stellar Australian Employment Change, which was much higher than expectations. AUD/USD barreled past the 1.02 line in Thursday’s Asian session. In the US, today’s highlight is Unemployment Claims. This market-mover could have a strong impact on the pair, as it is the only key economic release out of the US this week.

 The week didn’t start out well for the Australian dollar, as Retail Sales, one of the most important consumer spending indicators, dropped to a three-month low. Then, the RBA has caught the markets by surprise by slashing rates by 0.25%, to a level of 2.75%. The Australian dollar took a hit and lost about one cent against the US currency. However, AUD/USD has rebounded and made up some of those losses as it pushed back above the 1.02 line. The pair was helped by outstanding Employment Change numbers. The key indicator jumped from -36.1 thousand to 50.1 thousand, blowing past the estimate of 11.5 thousand. The stellar figure pushed down the Unemployment Rate from 5.6% to 5.5%.

Looking at Japan, USD/JPY continues to trade at high levels. At its recent policy meeting, the BoJ noted that it could take more than two years to reach its 2% inflation target. This possibility has been underscored by recent Japanese inflation releases, which continue to point to deflation in the economy, despite the best efforts of the BOJ to create some inflation. This has fuelled expectations that the BOJ will resort to further easing measures later in the year, as Prime Minister Abe and BOJ Governor Kuroda have stated very clearly that they will do whatever is needed to stamp out deflation, which has hobbled the Japanese economy for years. So we could see the yen continue to lose ground against the US dollar, and hit the elusive 100 level.

In China, Wednesday’s Trade Balance numbers looked sharp. After a rare deficit in the April reading, China reported a surplus of $18.2 billion in the May release. This beat the estimate of $15.5 billion, and was the key indicator’s best showing since February. However, traders should treat China’s trade data with caution, as the trade figures could be inflated to mask capital inflows into the country. Analysts have noted that a weak global economy has led to less demand for Chinese experts, so the figures being released by Chinese officials may not be accurate. Inaccurate economic figures out of China can pose a serious problem for traders and investors following AUD/USD, as China is Australia’s most important trading partner, and key data out of China is often a market-mover. Meanwhile, Chinese CPI, a key release, rose from 2.1% to 2.4%. This edged past the forecast of a 2.3% gain.

 

AUD/USD for Wednesday, May 9, 2013

Forex Rate Graph 21/1/13
 

AUD/USD May 9 at 11:45 GMT

AUD/USD 1.0224 H: 1.0254 L: 1.0155

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
1.00 1.0080 1.0174 1.0230 1.0298 1.0350

 

AUD/USD pushed across the 1.02 line in the Asian session and has climbed into the mid-1.02 range. The pair is testing resistance at 1.0230. There is stronger resistance at 1.0298, which is protecting the 1.03 level. On the downside, the pair is receiving support at 1.0174. The next support level is at 1.0080, which is protecting the critical parity line.

Current range: 1.0174 to 1.0230

 

Further levels in both directions:

  • Below: 1.0174, 1.0080, 1.00, and 99.83
  • Above: 1.0230, 1.0298, 1.0350, 1.0424 and 1.0508

 

OANDA’s Open Positions Ratio

The ratio has reversed direction from Wednesday and is currently pointing to movement towards short positions. This is not reflected in the pair’s current movement, as AUD/USD has posted gains in Thursday trading. However, long positions continue to make up most of the ratio, indicating a strong bias in favor of the pair moving higher. So we could see a correction to the Aussie’s upward movement.

It’s been a busy week for the AUD/USD, with the pair showing strong movement in both directions. We could see more volatility during the day, as the US releases key employment numbers later.

 

AUD/USD Fundamentals

  • 1:30 Australian Employment Change. Estimate 11.5 K. Actual 50.1K.
  • 1:30 Australian Unemployment Rate. Estimate 5.6%. Actual 5.5%.
  • 12:30 US Unemployment Claims. Estimate 333K.
  • 14:00 US Wholesale Inventories. Estimate 0.3%.
  • 14:00 US Mortgage Delinquencies. Actual 7.25%.
  • 14:30 US Natural Gas Storage. Estimate 80B.
  • 17:00 US 30-year Bond Auction

 

*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.