AUD/USD – Aussie Stabilizes As ADP Non-Farm Payrolls Falter

AUD/USD has edged higher in Wednesday trading, reversing the downward trend we’ve seen since the start of the week. Early in Wednesday’s North American session, the pair is trading just shy of the 0.95 line. In economic news, it was another disappointing day in the US as ADP Non-Farm Payrolls looked awful, posting its worst reading since April. The markets are anxiously awaiting the Federal Reserve Policy Statement later in the day. In Australia, HIA New Home Sales jumped 6.4%, its sharpest gain in over a year. There are no Australian releases on Wednesday.

The Federal Reserve winds up a policy meeting on Wednesday, its first since Congress hammered out an agreement on the debt ceiling and reopened the government. However, the agreement is little more than a band-aid solution which has pushed off the debt ceiling and budget deadlock for a few months, without resolving these two issues. Meanwhile, recent US data, notably employment numbers, have been sluggish. Given this situation, the Fed is unlikely to push the taper trigger until early 2014. The markets will be waiting for the Fed policy statement later today, and we could see some volatility in the currency markets afterwards.

US employment numbers continue to sag, and the bad news continued on Wednesday with the ADP Non-Farm Payrolls report.  The key indicator tumbled from 166 to 130 thousand, way off the estimate of 151 thousand. This was the weakest reading since April and points to a weak labor market. Last week, Unemployment Claims came in above the estimate and Non-Farm Payrolls tumbled to a six-month low.

Down Under, if RBA Governor Glenn Stevens was looking to scare the markets with some negative comments about the Australian dollar, he appears to have succeeded, at least temporarily. Stevens stated that the high level of the currency was not supported by the costs and productivity in the economy, and urged investors to tread carefully in the foreign exchange market. The RBA wants to see a lower Australian dollar, in order to boost the manufacturing and export sectors, which are struggling. The Bank is reluctant to lower interest rates right now, so it appears that Stevens is trying to “talk down” the currency. If the Australian dollar continues to trade at high levels, we can expect similar types of statements from the RBA.

In the US, the grim readings continued on Tuesday. PPI and Retail Sales both declined by 0.1%, missing the estimate of 0.2%. CB Consumer Confidence dropped sharply, from 79.7 to 71.2 points, a six-month low. This was well short of the estimate of 75.7 points. Core Retail Sales managed to match the forecast, rising to 0.4%. The mostly weak figures come on the heels of dismal housing numbers on Monday. If confidence in the US economy starts to weaken, we could see the dollar, which is already under pressure from the major currencies, lose ground.

 

AUD/USD for Wednesday, October 30, 2013

Forex Rate Graph 21/1/13

AUD/USD October 30 at 14:50 GMT

AUD/USD 0.9491 H: 0.9516 L: 0.9459

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.9229 0.9305 0.9400 0.9508 0.9613 0.9700

 

  • AUD/USD is steady in Wednesday trading, as the pair trades close to the 0.95 line.
  • The pair is facing resistance at 0.9508. This is a weak line which could be tested in the North American session. This is followed by a strong resistance line at 0.9613.
  • On the downside, the pair is receiving support at the round number of 0.9400. This is followed by support at 0.9305, which has remained in place since early October.
  • Current range: 0.9400 to 0.9508

 

Further levels in both directions:

  • Below: 0.9400, 0.9305, 0.9229 and 0.9119
  • Above: 0.9508, 0.9613, 0.9700, 0.9821 and 0.9900

 

OANDA’s Open Positions Ratio

AUD/USD ratio has edged higher in Wednesday trading. This is reflected in the pair’s current movement, as the Australian dollar has posted slight gains against the US dollar. A majority of the open positions in the AUD/USD ratio are long, reflecting a trader bias towards the Aussie continuing to move higher.

With all eyes on the FOMC Statement later on Wednesday, we could see some volatility from AUD/USD during the North American session.

 

AUD/USD Fundamentals

  • 12:15 US ADP Non-Farm Employment Change. Estimate 151K. Actual 130K.
  • 12:30 US Core CPI. Estimate 0.2%. Actual 0.1%.
  • 12:30 US CPI. Estimate 0.2%. Actual 0.2%.
  • 14:30 US Crude Oil Inventories. Estimate 1.9M.
  • 18:00 US FOMC Statement.
  • 18:00 US Federal Funds Rate. Estimate <0.25%.

 

*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.