AUD/USD – Aussie’s Misery Continues After Weak Australian Trade Balance

The Australian dollar continues to lose ground against its US counterpart. AUD/USD has dropped below the 0.95 level in Thursday’s North American session. Another weak key release hurt the Aussie, as Australian Trade Balance missed the  estimate. The Australian dollar has slumped badly, coughing up over two cents since Tuesday. In the US ADP Non-Farm Employment Change was well below its estimate. There was better news from the ISM Non-Manufacturing PMI, which came in slightly above the estimate. On Thursday, US unemployment Claims rebounded from a weak reading last week, as the key release met market expectations. Australia will release AIG Construction Index later on Thursday.

The Aussie continues on its unhappy southward journey, after a  couple of weak key releases. On Wednesday, GDP showed a respectable gain of 0.6% in Q1, but fell short of the 0.8% estimate. Trade Balance fared no better on Thursday. The indicator posted its second straight surplus, but it was a negligible on at that, at just AUD 0.03 billion. This missed the estimate of AUD 0.20 billion. The weak readings continue to point to an underperforming Australian economy, and the Aussie is paying the price,  as it continues to slide against the US dollar.

Which way is the US economy headed? The US continues to post some weak numbers, and on Wednesday it was the turn of ADP Non-Farm Payrolls. The key indicator has struggled, and has now missed the estimate for three consecutive releases. The indicator came in at 135 thousand, well off the forecast of 171 thousand. However, Unemployment Claims bounced back, posting a reading of 346 thousand, very close to the estimate of 345 thousand. We’ll see some more key employment numbers on Friday, as the US releases the Unemployment Rate and Non-Farm Payrolls.

Although the US Federal Reserve hasn’t made any changes so far, Fed policymakers, including Fed Chair Bernanke, continue to hint that QE could be scaled back in the next few months. With the US continuing to alternate between good and bad economic releases, the Fed may continue to hold off on any changes to QE before it is convinced that the US economy is improving. The Fed has repeatedly stated that it wants to see an improvement in the labor picture before taking any action, so this week’s employment releases could play a major role in what action, if any, the Fed takes with regard to QE.

 

AUD/USD for Thursday, June 6, 2013

Forex Rate Graph 21/1/13
 

AUD/USD June 6 at 13:15 GMT

AUD/USD 0.9485 H: 0.9516 L: 0.9435

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.9221 0.9328 0.9405 0.9541 0.9651 0.9727

 

AUD/USD has dipped below the 0.95 line in Thursday trading. On the upside, the pair faces resistance at 0.9541. This is followed by 0.9651, which has strengthened as the pair trades at lower levels. On the downside, the pair is receiving support at 0.9405. This line has held firm since October 2011.

  • Current range: 0.9405 to 0.9541

 

Further levels in both directions:

  • Below: 0.9405, 93.28, 92.21 and 0.9071
  • Above: 0.9541, o.9651, 0.9727, 0.9795 and 0.9907

 

OANDA’s Open Positions Ratio

AUD/USD ratio has shifted direction, and is indicating movement towards short positions. This is consistent with the current movement of the pair, as the Aussie continues to lose ground against the US dollar.

The Australian dollar continues to struggle, and has posted sharp drops this week. Will the downward trend continue? We could see some activity from the pair on Friday, as the US releases two key employment events. 

AUD/USD Fundamentals

  • 23:30 Australian AIG Construction Index.
  • 11:30 US Challenger Job Cuts.
  • 12:30 US Unemployment Claims. Exp. 345K. Actual 346K.
  • 14:30 US Natural Gas Storage. Exp. 101B.

 

*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.