The Australian dollar has started the new trading week above the 0.90 level. In economic news, Australian New Motor Vehicle Sales slid sharply in January, dropping to a six-month low. Over in the US, the markets are closed for a holiday on Monday, so we can expect thin trade from AUD/USD during the day.
Australian releases started the week with a whimper, as New Motor Vehicle Sales declined 3.5%. The indicator is an important gauge of consumer spending, as new motor vehicles are big-ticket purchases which reflect consumer confidence and spending levels. The sharp slide comes after two consecutive gains.
The Aussie lost ground following dismal employment numbers on Thursday. Employment Change posted its second straight decline, with a reading of -3.7 thousand. This figure was an improvement over the December reading of -22.6 thousand, but was still way off the estimate of +15.3 thousand. There was more grim news from the unemployment rate, which hit 6.0%, above the estimate of 5.9%. This was the highest level in over 10 years. 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.
In the US, news from the employment front was not much better. Last week, Unemployment Claims rose to 337 thousand, above the estimate of 331 thousand. This reading comes on the heels of JOLTS Job Openings, which also missed market expectations. Meanwhile, Core Retail Sales dropped to 0.0%, a nine-month low. The estimate stood at 0.1%. Retail Sales brought no relief, slipping to -0.4%, short of the estimate of 0.0%.
Federal Reserve chair Janet Yellen didn’t generate much excitement in the markets when she testified before Congress last week. 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 and the Fed plans to keep interest rates at ultra-low levels. Yellen, who took over as Fed chair on February 1, is expected to continue the policies of her predecessor, Bernard Bernanke.
AUD/USD for Monday, February 17, 2014
AUD/USD February 17 at 14:15 GMT
AUD/USD 0.9034 H: 0.9069 L: 0.9023
- AUD/USD has edged lower in Monday trade. The pair touched a high of 0.9069 in the Asian session but was unable to consolidate at these levels.
- 0.9000, a key line, is providing support. It is not a strong line and could face pressure during the day. This is followed by stronger support at 0.8893.
- 0.9119 is the next line of resistance. This 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, 0.8658 and 0.8516
- Above: 0.9119, 0.9229, 0.9361 and 0.9466
OANDA’s Open Positions Ratio
AUD/USD ratio is pointing to gains in short positions in Monday trading. This is consistent with what we are seeing from the pair, as the Australian dollar has lost ground against the US currency. AUD/USD ratio continues to have a majority of long positions, reflecting a trader bias towards the Aussie rebounding.
The Australian dollar is back above the 0.9000 level. With the US markets closed on Monday, we could see quiet trading from AUD/USD during the North American session.
- 00:30 Australian New Motor Vehicle Sales. Actual -3.5%.
*Key releases are highlighted in bold
*All release times are GMT