AUD/USD – Struggling Aussie Dips Below 0.90 Level

The US dollar continues to put pressure on its Australian counterpart. AUD/USD has dropped below the critical the 0.90 line in Tuesday’s European session. It’s another light schedule on Tuesday, highlighted by US CB Consumer Confidence. There are no Australian releases on Tuesday.

US key releases have not looked sharp lately, with Core Durable Goods Orders and Durable Goods Orders the latest releases to miss their estimates.  Durable Goods Orders plunged 7.3% in August, much worse than the estimate of a 3.0% decline. Core Durable Goods Orders, a key release, dropped 0.6%, its first decline since April. The markets had anticipated a gain of 0.6%. These poor manufacturing figures come after the release of New Home Sales on Friday, which also were well off market expectations. However, the Aussie has failed to take advantage of the weak US numbers, as the market focus appears to be on QE tapering rather than US economic releases.

The annual Jackson Hole Summit concluded on the weekend, but anyone expecting some clarity on QE tapering was in for a disappointment. Federal Reserve head Bernard Bernanke was a no-show, and other policymakers didn’t hesitate to share their views. Dennis Lockhart, head of the Atlanta Fed, said that tapering could start in September, but only if US economic numbers justified such a move. There was a more hawkish statement from James Bullard, head of the St. Louis Fed. Bullard said that there was no need for the Fed to rush into QE tapering. The uncertainty over QE tapering has boosted the US dollar, raised the yields on US treasury bonds and had worldwide repercussions, such as causing jittery investors to pull billions of dollars out of emerging markets.

Australians head for the polls on September 7th, and the head of the opposition Liberal Party, Tony Abbott, is favored to become the new prime minister. Abbott is considered pro-business and has hammered away at the Labor government for mismanaging Australia’s economy, which continues to struggle. Abbott has promised a stronger economy and a return to budget surpluses. Australia has been hard hit by the global economic crisis, and the Australian dollar has tumbled in recent months, shedding 11% of its value since May.

 

AUD/USD for Tuesday, August 27, 2013

Forex Rate Graph 21/1/13
 

AUD/USD August 27 at 14:00 GMT

AUD/USD 0.8972 H: 0.9010 L: 0.8934

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.8747 0.8848 0.8926 0.9000 0.9089 0.9135

 

AUD/USD has lost ground in Tuesday trading. The pair dropped below the 0.90 line in the Asian session and continued to fall in European trading. In the North American session, the pair pushed close to the 0.90 line before retracting.

AUD/USD is putting pressure on the 0.90 level on the upside. This is followed by stronger resistance at 0.9089.

On the downside, there is support at 0.8926. This is not a strong line, and could face pressure if the Aussie continues to sag. This is followed by support at 0.8848. This line has remained intact since January.

  • Current range: 0.8926 to 0.9000

 

Further levels in both directions:

  • Below: 0.8926, 0.8848, 0.8747 and 0.8578
  • Above: 0.9000, 0.9089, 0.9135, 0.9221 and 0.9328

 

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to movement towards long positions. This is not currently reflected in the pair’s movement, as the Aussie has lost ground in Tuesday trading. The makeup of the ratio shows a solid majority of long positions, indicating that trader sentiment is strongly biased towards the Aussie making gains against the US dollar.

The Aussie remains under pressure and has fallen below the important 0.90 level. With the US releasing key consumer confidence numbers later in the day, we could see some more activity from AUD/USD in the North American session.

 

AUD/USD Fundamentals

  • 13:00 US S&P/CS Composite-20 HPI. Estimate 11.9%. Actual 12.1%.
  • 14:00 US CB Consumer Confidence. Estimate 79.6 points.
  • 14:00 US Richmond Manufacturing Index. Estimate -7 points.

 

*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.