AUD/USD – Little Change in Holiday Trading

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

Forex Rate Graph 21/1/13

AUD/USD February 17 at 14:15 GMT

AUD/USD 0.9034 H: 0.9069 L: 0.9023

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.8735 0.8893 0.9000 0.9119 0.9229 0.9361

 

  • 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.

 

AUD/USD Fundamentals

  • 00:30 Australian New Motor Vehicle Sales.  Actual -3.5%.

*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.