AUD/USD – Edges Higher Ahead of Key US Releases

AUD/USD has edged higher, and is trading in the low-0.93 range in Thursday’s European session. On Wednesday, US GDP numbers disappointed, falling well below market expectations. The markets will be treated to string of US releases on Thursday, with the major events being Unemployment Claims and Pending Home Sales. There are no Australian releases on Thursday.

The markets got a look at US GDP numbers on Wednesday, and the results were less than impressive. Final GDP climbed nicely, from 0.4% to 1.8%, but this was well short of the estimate of 2.4%. The Final GDP Price Index rose 1.2%, edging past the estimate of 1.1%. The weak GDP release put a damper on a bright market mood thanks to excellent US numbers on Tuesday. Core Durable Goods, CB Consumer Confidence and New Home Sales, all key releases, beat their estimates. Manufacturing data, often a sore spot, also looked good as the Richmond Manufacturing Index had its best performance since last November. The strong numbers are particularly encouraging as they come from a wide range of economic sectors.

Is the Federal Reserve backtracking on QE? The US dollar surged last week after Federal Reserve Chair Bernard Bernanke said that the Fed was planning to scale down QE. However, US (and global) stock markets fell sharply on the news, and the Fed finds itself trying to contain the damage and calm the nervous markets. Dallas Fed President Richard Fisher declared that “tapering” should not be confused with “tightening” and said that the Fed was not exiting from its accommodative policy action just yet. Minneapolis Fed President Naraya Kocherlakota reiterated that the Fed was continuing with an expansionary monetary policy event if QE was terminated, and said that it was a misperception to assume that the Federal Reserve had turned more hawkish. One can be excused for dismissing these statements as little more than linguistic acrobatics, and it is questionable if the markets will be reassured by these statements from the Fed, which are clearly aimed at damage control and reassuring nervous investors.

In Australia, the political battles are heating up, as  Prime Minister Julia Gillard was defeated in a Labor party leadership ballot on Wednesday, and was replaced by Kevin Rudd, who takes over as Prime Minister. According to a recent poll, Gillard’s Labor Party could take a beating in the September vote and lose more than half of its 71 seats in parliament. Elections have been called for September, and Labor is facing an uphill battle to win re-election. Meanwhile, Chris Bowen, a close ally of Rudd, has been appointed Treasurer. Bowen will also have his work cut out for him, as the Australian economy continues to sputter, despite repeated rate cuts by the RBA. Rudd is considered as being business-friendly, and his victory in the Labor leadership race could boost consumer and business confidence, and help prop up the sinking Australian dollar.  

 

AUD/USD for Thursday, June 27, 2013

Forex Rate Graph 21/1/13
 

AUD/USD June 27 at 12:30 GMT

AUD/USD 0.9314 H: 0.9339 L: 0.9276

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.9072 0.9135 0.9221 0.9328 0.9405 0.9541

 

AUD/USD is steady in Thursday trading, and pushed across the 0.93 line late in the Asian session. The pair has tested resistance at 0.9328, and this line could break if the Australian dollar gains any strength. This is followed by stronger resistance at 0.9405. On the downside, the pair continues to receive support at 0.9221. This is followed by support level at 0.9135. This line has remained intact since September 2010.

  • Current range: 0.9221 to 0.9328

 

Further levels in both directions:

  • Below: 0.9221, 0.9135, 0.9071, 0.9000, 0.8916 and 0.8747
  • Above: 0.9328, 0.9405, 0.9541 and 0.9651

 

OANDA’s Open Positions Ratio

AUD/USD ratio remains unchanged, continuing the trend we have seen since Tuesday. This is consistent with what we are currently seeing from AUD/USD, as the pair continues to tread softly and trade quietly.  

AUD/USD is enjoying a quiet day. However, we could see some movement from the pair as the US releases key employment and housing numbers later in the day.

 

AUD/USD Fundamentals

  • 12:30 US Unemployment Claims. Estimate 347K.
  • 12:30 US Core PCE Price Index. Estimate 0.1%.
  • 12:30 US Personal Spending. Estimate 0.3%.
  • 12:30 US Personal Income. Estimate 0.2%.
  • 14:00 US Pending Home Sales. Estimate 1.1%.
  • 14:00 US FOMC Member William Dudley Speaks.
  • 14:30 US FOMC Member Jerome Powell Speaks.
  • 14:30 US Natural Gas Storage. Estimate 89B.

 

*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.