AUD/USD – Rangebound As Consumer Sentiment Rebounds

The Australian dollar is almost unchanged in Wednesday trading. The pair is trading just above the 0.94 level early in the Wednesday North American session. In economic news, Westpac Consumer Sentiment posted a solid gain of 1.9% in October. Wage Price Index posted a 0.5% gain, falling short of the estimate. It’s another quiet day in the US, with no major releases on the schedule.

Australian Westpac Consumer Sentiment looked sharp in October, posting a gain of 1.9%. The important consumer confidence indicator rebounded strongly after September’s decline of -2.1%. Consumer Sentiment is particularly significant because strong consumer confidence usually leads to increased consumer spending, which is a crucial component of economic growth. Wage Price Index, a leading inflation indicator, failed to keep pace. The index rose 0.5%, missing the estimate of 0.8%. This weak figure was the smallest gain in more than six years, pointing to weak inflation in the fragile Australian economy. The Australian dollar remains soft and has lost around 200 points against the US currency in less than one week.

The struggling Aussie can’t seem to get a break, even when Australian numbers are strong. On Monday, the currency failed to take advantage of Home Loans, which rebounded from a sharp loss of 3.9% in September, jumping 4.4% last month. This easily beat the estimate of 3.6% and was the sharpest gain the indicator has posted since April. The strong figure points to increased activity in the housing sector, one of the bright spots in the Australian economy.

It’s been an unusually quiet week so far in the US, with no major events due for release until Thursday. However, the dollar is managing just fine, riding on the coattails of Friday’s superb Non-Farm Payrolls. The markets had very low expectations from the key indicator, one of the most important economic releases. The estimate for the October release stood at just 121 thousand, as there was concern that the reading would be artificially low due to the government shutdown in October. However, the indicator put those concerns to rest, as the indicator soared to 204 thousand, its highest level in eight months. The outstanding NFP figure bolstered the US dollar against the major currencies, and has increased speculation that the Fed might press the tapering trigger in December. Such talk could bolster the US currency, as a reduction in QE is bullish for the dollar. At the same time, speculation about a scaling down in QE introduces some uncertainty and volatility in the currency markets.

 

AUD/USD for Wednesday, November 13, 2013

Forex Rate Graph 21/1/13

AUD/USD November 13 at 15:00 GMT

AUD/USD 0.9302 H: 0.9306 L: 0.9302

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.9000 0.9119 0.9229 0.9305 0.9400 0.9508

 

  • AUD/USD is rangebound in Wednesday trading, as the pair sticks close the 0.93 line.
  • On the upside, the pair is testing resistance at 0.9305. This is followed by resistance at the round number of 0.9400.
  • AUD/USD pair is receiving support at 0.9229. This is followed by a support line at 0.9229, which has remained intact since mid-September.
  • Current range: 0.9229 to 0.9305

 

Further levels in both directions:

  • Below: 0.9229, 0.9119, 0.9000 and 0.8926
  • Above: 0.9305, 0.9400, 0.9508, 0.9613 and 0.9700

 

OANDA’s Open Positions Ratio

AUD/USD ratio is showing almost no change in Wednesday trading. This is reflected in the current movement of the pair, which is showing very little movement. The ratio is made up of a majority of open long positions, reflecting a trader bias towards the Australian dollar breaking out moving to higher ground.

The Aussie remains under pressure as it tries to stay in 0.93 territory. With no major US releases on Wednesday, we could see an uneventful North American session.

 

AUD/USD Fundamentals

  • 00:30 Australian Wage Price Index. Estimate 0.8%. Actual 0.5%.
  • 18:01 US 10-year Bond Auction.
  • 19:00 US Federal Budget Balance. Estimate -104.3 B.

*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.