AUD/USD – Aussie Shrugs Off Weak Consumer Confidence

The improving Australian dollar is steady on Wednesday, as AUD/USD trades above the 0.90 line in European trading. The Aussie continues to impress lately, having climbed almost 300 points in just over a week. In economic news, Australian Westpac Consumer Sentiment posted a third straight decline. It’s a quiet day in the US, with just three releases. On Tuesday, Fed chair Janet Yellen testified before Congress and reiterated that the Fed plans to continue tapering QE. JOLT Job Openings, a key event, showed little change in January and fell short of the estimate. There are no Australian releases on Wednesday.

Consumer confidence in Australia continues to weaken, as Westpac Consumer Sentiment dipped 3.7% in January, its third straight decline and fourth in the past five readings. A decrease in consumer confidence likely means less consumer spending, which is critical for economic growth. However, Australia did post strong business confidence and inflation numbers earlier in the week. NAB Business Confidence rose to 8 points, a four-month best. House Price Index jumped 3.4%, beating the estimate of 3.2%. Home Loans failed to keep pace, posting a decline of -1.9%. This was well below the estimate of +0.5%.  Meanwhile, Chinese Trade Balance improved to $31.9 billion, up from $25.6 billion a month earlier, and well above the estimate of $24.2 billion. Since China is Australia’s number one trading partner, key Chinese data such as Trade Balance can affect the movement of AUD/USD.

Fed chair Janet Yellen, who just started her new job on February 1, didn’t generate much excitement in her appearance before Congress on Tuesday. She said that the Fed plans to continue trimming QE, provided that the employment picture continues to improve and inflation rises. She acknowledged that even though the unemployment rate has improved steadily, the recovery in the labor market is far from complete. Meanwhile, JOLTS Job Openings, a key event, showed little change in January, with a reading of 3.99 million. This was short of the estimate of 4.04 million.

AUD/USD for Wednesday, February 12, 2014

AUD/USD February 12 at 13:50 GMT

AUD/USD 0.9038 H: 0.9068 L: 0.9007

AUD/USD Technical

• AUD/USD has posted slight gains in Tuesday trading. The pair posted gains in the Asian session but has retracted in European trading.
• 0.9000, a key line, continues to provide support. It is a weak line and could break during the day if the Aussie loses ground. This is followed by strong support at 0.8893.
• On the upside, 0.9119 is the next line of resistance. It is followed by resistance 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, 0.9229, 0.9361 and 0.9466

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to losses in Wednesday trading. This is not consistent with what we are seeing from the pair, as the Australian dollar has posted slight gains. AUD/USD ratio is made up of a substantial majority of long positions, reflecting a trader bias towards the Aussie continuing its impressive rally.

The Australian dollar continues to point upwards and is trading above the 0.90 line. The pair has edged lower in the European session.

AUD/USD Fundamentals

• 15:00 US Crude Oil Inventories. Estimate 2.5M.
• 18:01 US 10-year Bond Auction.
• 19:00 US Federal Budget Balance. Estimate -16.4B.

*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.