AUD/USD – Modest Gains As Australian GDP Improves

The Australian continues to move higher, as AUD/USD trades close to the key 0.90 line. In economic news, Australian GDP posted another strong gain. In the US, employment numbers continue to sag, as ADP Non-Farm Employment Change dropped to a four-month low.

Australian GDP posted a healthy gain of 0.8% in Q4, edging above the estimate of 0.7%. This follows four straight releases with a gain of 0.6%. Earlier in the week, Building Permits, a key release, posted a sharp gain of 6.8%, crushing the estimate of 0.7%. The volatile indicator broke a streak of three straight declines. Meanwhile, the RBA opted to keep a steady course and maintain interest rates at 2.50%, where they have been pegged since August. The Bank said that current low rates were likely to remain low for some time and also took a shot at the high value of the Australian dollar. Governor Glenn Stevens stated that the currency remains “high by historical standards.” The RBA has said in the past that it would like to see the Aussie closer to the 85 level, so we’re likely to see the central bank continue to “talk down” the currency.

Meanwhile, nervous markets are glued to the Ukraine, as Russia has effectively taken over Crimea following the ousting of the Ukrainian president, who has fled to Russia. The US and Russia continue to talk tough as the standoff between Russia and the Ukraine continue. Until this tense situation subsides, traders should be prepared for volatility in the currency markets.

In the US, employment numbers continue to raise concerns. ADP Non-Farm Employment Change posted another sharp drop in February, coming in at 139 thousand, down from 175 thousand a month earlier. The weak reading was well off the estimate of 159 thousand. We’ll get a look at Unemployment Claims and the official Non-Farm Payrolls later in the week, and the dollar could take a hit if these releases fail to meet expectations. At the moment, the assumption is that the Fed will continue its QE tapering moves also in March, despite recent hiccups in key economic numbers. Another trim to QE is bullish for the US dollar and would mark a vote of confidence by the Fed in the US economy.

 

AUD/USD for Wednesday, March 5, 2014

Forex Rate Graph 21/1/13

 

AUD/USD March 5 at 13:50 GMT

AUD/USD 0.8979 H: 0.8997 L: 0.8941

 

AUD/USD Technical

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

 

  • AUD/USD has edged higher in Wednesday trading. The pair touched a high of 0.8997 early in the Asian session.
  • On the upside, the key barrier of 0.9000 is under strong pressure. This is followed by stronger resistance at 0.9119.
  • 0.8893 is providing support. The next support line is 0.8735, which has remained intact since early February.
  • 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 has reversed directions on Wednesday, pointing to gains in long positions. This is consistent with what we are seeing from the pair, as the Aussie has edged higher. AUD/USD ratio is made up of a majority of long positions, reflecting a trader bias towards the Australian dollar continuing to move higher against the US currency.

AUD/USD continues to point upwards and is within striking distance of the 0.90 line. The pair is steady in the European session.

 

AUD/USD Fundamentals

  • 00:30 Australian GDP. Estimate 0.7%. Actual 0.8%.
  • 13:15 US ADP Non-Farm Employment Change. Estimate 159K. Actual 139K.
  • 14:00 US Final Services PMI. Estimate 52.7 points. Actual 53.3 points.
  • 15:00 US ISM Non-Manufacturing PMI. Estimate 53.8 points.
  • 15:30 US Crude Oil Inventories. Estimate 0.9M.
  • 19:00 US Beige Book.

*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.