AUD/USD – Aussie Tumbles As GDP Disappoints

The Australian dollar has dropped sharply against the US dollar in Wednesday trading, following a weak Australian GDP. AUD/USD has lost about one cent on Wednesday, as the Aussie struggles to remain above the key 0.90 level. In economic news, Australian GDP missed the estimate. In the US, there’s plenty of action on Wednesday, with four key events – ADP Non-Farm Employment Change, Trade Balance, ISM Non-Manufacturing PMI and Home Sales.

Australian GDP, one of the most important economic indicators edged lower in November, posting a gain of 0.6%, compared to 0.7% a month previously. This fell short of the estimate of 0.8%. Meanwhile, AIG Services Index continues to improve and climbed to 49.8 points in November. A reading over 50 indicates growth, and the index has not been above the 50 threshold since January 2012.

As expected, the RBA did not reduce interest rates on Tuesday. The benchmark rate has remained pegged at 2.50% since August. Although the Bank has not shied away from saying that the Aussie is overvalued and is impeding economic growth, it has been hesitant to reduce rates, and this was apparent once again on Tuesday. In other news, Retail Sales dropped to 0.5% in October, down from 0.8% the month before, but edged above the estimate of 0.4%. The current account deficit widened to -12.7 billion dollars, well above the estimate of -11.1 billion.

In the US, the markets will be keeping a close eye on this week’s employment releases, stating with the ADP Non-Farm Payrolls later on Wednesday. If US employment numbers continue to improve, the Federal Reserve is likely to take action and taper QE early next year. Unemployment Claims have looked sharp for the past two releases, and if the Non-Farm Payrolls and Unemployment Rate look solid this week, the US dollar could gain ground against the slumping Aussie.

AUD/USD for Wednesday, December 4, 2013

AUD/USD December 4 at 12:15 GMT

AUD/USD 0.9028 H: 0.9138 L: 0.9009

AUD/USD Technical

• AUD/USD has posted sharp losses in Wednesday trading. The pair dropped to a low of 0.9008 early in the European session but has edged higher.
• The pair is receiving weak support at 0.9000. Will this key level hold off the surging US dollar? This line is followed by support at 0.8893.
• On the upside, 0.9119 has reverted to a resistance role as the pair loses ground. This is followed by a resistance line at 0.9229.
• Current range: 0.9000 to 0.9119

Further levels in both directions:

• Below: 0.9000, 0.8893, 0.8735 and 0.8658
• Above: 0.9119, 0.9200, 0.9305, 0.9400 and 0.9508

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in short positions in Wednesday trading. This is reflected in the current movement of the pair, as the Aussie has posted sharp losses against its US counterpart. The ratio is made up of a substantial majority of long positions, reflecting a trader bias towards the Australian dollar reversing directions and moving to higher ground.

After a quiet start to the week, AUD/USD has dropped sharply on Wednesday. We could see more activity from the pair during the North American session, as the US releases four major events during the day, highlighted by ADP Non-Farm Employment Change.

AUD/USD Fundamentals

• 00:30 Australian GDP. Estimate 0.8%. Actual 0.6%.
• 13:15 US ADP Non-Farm Employment Change. Estimate 172K. 
• 13:30 US Trade Balance. Estimate -40.3B.
• 15:00 US ISM Non-Manufacturing PMI. Estimate 55.4 points.
• 15:00 US New Home Sales. Estimate 432K.
• Sep. Data – US New Home Sales. Estimate 427K.
• 15:30 US Crude Oil Inventories. Estimate -0.5M
• 16:20 President Barak Obama Speaks.
• 19:00 US Beige Book.

*Key releases are highlighted in bold

*All release times are GMT

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