AUD/USD – Limited Losses Ahead of Aussie Employment Data

The Australian dollar has lost ground on Wednesday, as AUD/USD trades close to the 0.91 line in the European session. In economic news, Wednesday is subdued, with no Australian releases. In the US, today’s highlight is Crude Oil Inventories. The markets are keeping a close watch on Australian employment data, which will be released on Thursday.

Australian releases have not been impressive, and Tuesday’s numbers could have been stronger. NAB Business Confidence came in at 5 points, unchanged from the October reading. Home Loans posted a gain of 1.0%, well of last month’s reading of 4.4%, and missing the estimate of 1.3%. Last week, Retail Sales and GDP missed their estimates, and the Aussie will have a tough time keeping pace with the US dollar if Australian releases don’t show improvement. On Thursday, Australia will release Employment Change, one of the most important economic indicators. After a small gain in October, the markets are expecting a strong turnaround for November, with an estimate of 10.3 thousand. Will the indicator meet or beat this rosy prediction?

Over in the US, last week’s employment numbers were excellent, as Unemployment Claims, Non-Farm Payrolls and the Unemployment Rate all impressed. The Fed has said that a stronger employment picture is a prerequisite to QE tapering, and last week’s numbers certainly increase the possibility of the Fed taking action at its December policy meeting. Currently, the Fed is purchasing $85 billion in assets every month, and a Fed taper would likely boost the US dollar against the major currencies.

With memories of the October government shutdown still fresh on Capitol Hill, lawmakers have reached a budget deal which Congress will have to approve. The agreement will remove the risk of a government shutdown and reduce the deficit by a modest $23 billion. Democrats and Republicans both had criticism of the proposal, but there is general agreement in Washington that the compromise reached is a positive step which removes some of the economic uncertainty we’ve seen in recent months. Congress must approve a budget, or the US could face another government shutdown in mid-January.

 

AUD/USD for Wednesday, December 11, 2013

Forex Rate Graph 21/1/13

AUD/USD December 11 at 12:40 GMT

AUD/USD 0.9114 H: 0.9152 L: 0.9105

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.8735 0.8893 0.9000 0.9119 0.9229 0.9305

 

  • AUD/USD has posted modest losses in Wednesday trading. The pair touched a low of 0.9105 earlier in the European session.
  • The pair continues to receive support at the key level of 0.9000. This is followed by support at 0.8893.
  • On the upside, AUD/USD is testing resistance at 0.9119. This line has been active all week and could face strong pressure during the day. 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 almost unchanged in Wednesday trading. This is not reflected in the current movement of the pair, as the Australian dollar has reversed directions and lost ground. The ratio is made up of a substantial majority of long positions, reflecting a trader bias towards the Australian dollar turning around and moving higher.

The Australian dollar is under pressure as it tries to stay above the 0.91 line. With no major releases out of the US on Wednesday, we could see limited movement from the pair during the North American session.

 

AUD/USD Fundamentals

  • 15:00 US Treasury Secretary Jack Lew Speaks.
  • 15:30 US Crude Oil Inventories. Estimate -2.2M.
  • 18:01 US 10-year Bond Auction.
  • 19:00 US Federal Budget Balance. Estimate -142.6B.

 

*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.