AUD/USD – Slight Losses Ahead Of Key US Housing Data

The Australian dollar remains under pressure and has dipped below the 0.90 line in Friday trading. In economic news, it’s a very quiet day, with only two US releases. The markets will be hoping that today’s highlight, US Existing Home Sales, can wrap up the week on a positive note. There are no Australian releases on Friday.

The wobbly Aussie is sensitive to key Chinese releases, as China is Australia’s number one trading partner. Earlier in the week, Chinese Manufacturing PMI pointed to contraction in the manufacturing sector for a second straight month, coming in below the 50-point level. The index dropped to 48.3 points, its lowest level in eight months. A decrease in Chinese manufacturing could have serious consequences for the Australian economy and weigh on the shaky Australian dollar.

US numbers were a mix on Thursday. Unemployment Claims dropped slightly last week, coming in at 336 thousand. This was just shy of the estimate of 335 thousand. After some recent weak releases on the employment front, the markets will be pleased with this release. Meanwhile, inflation indicators continue to raise concerns, as Core CPI posted a paltry gain of 0.1% for the second straight month. Weak inflation levels are indicative of weak economic growth and could spell trouble for the US recovery. On the manufacturing front, the Philly Fed Manufacturing Index slumped badly, posting a decline of -6.3 points, compared to +9.4 points a month earlier. This marked the first reading below the zero level since January 2013. US numbers have not looked strong of late, and this has helped the euro hold its ground above the 1.37 level.

This week’s Federal Reserve minutes indicated that interest rates are unlikely to rise, even if unemployment drops to 6.5%. Previously, the Fed had said it would consider raising rates at the 6.5% threshold, but with unemployment falling faster than expected, Fed policymakers agreed that it would “soon be appropriate” to revise the Fed’s forward guidance regarding interest rate levels. The minutes also indicated that the Fed will likely continue trimming QE, barring any downturns in the economy.

 

AUD/USD for Friday, February 21, 2014

Forex Rate Graph 21/1/13

AUD/USD February 21 at 13:20 GMT

AUD/USD 0.8968 H: 0.9015 L: 0.8966

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.8658 0.8735 0.8893 0.9000 0.9119 0.9229

 

  • AUD/USD has lost ground on Friday and dropped below the key 0.90 line in the European session.
  • 0.8893 is providing support. This is followed by support at 0.8735.
  • On the upside, 0.90 has already seen action today and is a weak resistance line. It is followed by resistance at 0.9119.
  • Current range: 0.8893 to 0.9000

 

Further levels in both directions:

  • Below: 0.8893, 0.8735, 0.8658 and 0.8516
  • Above: 0.9000, 0.9119, 0.9229, 0.9361 and 0.9466

 

OANDA’s Open Positions Ratio

AUD/USD ratio is unchanged in Friday trading. This is not consistent with what we are seeing from the pair, as the Australian dollar is losing ground. AUD/USD ratio continues to have a majority of long positions, reflecting a trader bias towards the Aussie reversing directions and moving higher against the US currency.

The Australian dollar has lost ground on Friday. In the European session, the AUD/USD has dropped below the 0.90 level and remains under pressure.

 

AUD/USD Fundamentals

  • 15:00 US Existing Home Sales. Estimate 4.73M.
  • 18:45 FOMC Member Richard Fisher Speaks.

*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.