AUD/USD – Aussie Remains Under Pressure, Dips Below 0.96

AUD/USD is under pressure as we begin the new trading week. The pair continues to trade slightly short of the 0.96 line in European trading on Monday. In economic news, US releases were a big disappointment on Friday. Core Durable Goods Orders posted its third consecutive decline, while UoM Consumer Sentiment slid to a ten-month low. It’s a quiet start to the week, with just a handful of releases. Today’s major release is US Pending Home Sales. In Australia, RBA Governor Glenn Phillips will address an investment conference in Sydney. 

Last week ended on a disappointing note as key US releases posted declines. Core Durable Goods Orders dropped -0.1%, well below the estimate of a 0.6% gain. This was the third straight decline for the indicator. Durable Goods Orders looked much better, posting a strong gain of 3.7%. UoM Consumer Sentiment couldn’t find its footing, dropping from 77.5 to 73.2 points, its weakest showing in 2013. The estimate stood at 78.2 points. If we don’t see stronger releases out of the US this week, the greenback could lose ground.

US employment releases did not look sharp last week, continuing to raise concerns about the health of the US economy. On Thursday, Unemployment Claims came in at 350 thousand, above the estimate of 343 thousand. This weak figure came on the heels of Non-Farm Payrolls, which slipped to a six-month low. The US unemployment rate dipped to 7.2%, a five-year low, but this does not point to increased employment, as the participation rate remained at 63.8%, its lowest level since 1978. These figures indicate that the US labor market continues to have difficulty creating new jobs.

The new government in Australia, which swept into power last month, has plenty of economic challenges on its plate. Finance Minister Mathias Cormaan acknowledged as much on the weekend when he said that the fiscal situation “continues to deteriorate”. The mining investment boom has run out of steam, unemployment is rising while growth has fallen. The Australian dollar remains high, and this is hurting the manufacturing and exporting sectors. The RBA continues to state that it wants to see a lower Australian dollar, so a rate cut remains a possibility in the near future if the currency remains well above the 0.90 level.

The US government is again functioning and a default has been averted, but the recent agreement hammered out in Congress provides short-term relief only, as it raises the debt ceiling until early February and funds the government until mid-January. The underlying budgetary issues remain unresolved, consumer confidence has been shaken and employment numbers are not looking good, as we saw last week. Given this situation, the Fed is unlikely to reduce QE until early 2014, perhaps as late as March or April.

 

AUD/USD for Monday, October 28, 2013

Forex Rate Graph 21/1/13

AUD/USD October 28 at 11:55 GMT

AUD/USD 0.9583 H: 0.9623 L: 0.9582

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.9305 0.9400 0.9508 0.9613 0.9700 0.9821

 

  • AUD/USD has posted slight losses on Monday. The pair has dropped below the 0.96 line in the European session.
  • The pair continues to face weak resistance at 0.9613. This is followed by strong resistance line at the round number of 0.9700.
  • On the downside, the pair is receiving strong support at 0.9508. This is followed by an important support line at 0.9400, which has remained intact since early October.
  • Current range: 0.9508 to 0.9613

 

Further levels in both directions:

  • Below: 0.9508, 0.9400, 0.9305 and 0.9229
  • Above: 0.9613, 0.9700, 0.9821, 0.9900 and 1.00

 

OANDA’s Open Positions Ratio

AUD/USD ratio has picked up where it left off on Friday, pointing towards long positions on Monday. This is not reflected in the pair’s current movement, as the Australian dollar continues to lose ground against the US dollar. A majority of the open positions in the AUD/USD ratio are long, reflecting a trader bias towards the Aussie reversing direction and moving higher.

The Australian dollar remains under pressure, and is struggling to stay close to the 0.96 line. With the US releasing key housing data later in the day, we could see some volatility from the pair if the reading is not in line with market expectations.

 

AUD/USD Fundamentals

  • 13:15 US Capacity Utilization Rate. Exp. 78.1%.
  • 13:15 US Industrial Production. Exp. 0.5%.
  • 14:00 US Pending Home Sales. Exp. 0.5%.
  • 22:30 RBA Governor Glenn Stevens Speaks.

*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.