AUD/USD – Gains As Retail Sales Sparkles

The Australian dollar is up close to a cent in Thursday trade, as the pair has climbed to the mid-0.90 range. The Aussie received a boost from some solid domestic data, as Retail Sales and Trade Balance showed strong improvement in February. Later in the day, RBA head Glenn Stevens is scheduled to testify before the House of Representatives of Economic Committee in Sydney. There was also good news out of the US, as Unemployment Claims dropped sharply and easily beat the estimate.

There was a sigh of relief as Unemployment Claims looked solid and dropped to 323 thousand in February, down sharply from 348 thousand a week earlier. The estimate stood at 336 thousand. The US faces a big test on Friday, with the release of Nonfarm Payrolls. The markets are expecting an improvement in February, but the ADP Nonfarm Payroll release on Wednesday fell well short of the estimate. If Nonfarm Payrolls fails to meet expectations, we could see the US dollar lose ground.

It’s been an excellent week for Australian releases. Retail Sales looked sharp in February, with a strong gain of 1.2%. This easily beat the estimate of 0.5%, and was the indicator’s strongest gain since last March. Retail Sales is the primary gauge of consumer spending, so a strong reading from the indicator points is an important sign of economic growth. Trade Balance also looked sharp, posting a surplus of $1.43 billion, crushing the estimate of $0.13 billion. The indicator has been marked by monthly deficits, so a sharp increase in the trade surplus is certainly good news for the economy and the Australian dollar. Other key indicators also looked sharp. 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%. Building Permits, a key release, jumped 6.8%, crushing the estimate of 0.7%.

Earlier this week, 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.

 

AUD/USD for Thursday, March 6, 2014

Forex Rate Graph 21/1/13

 

AUD/USD March 6 at 14:40 GMT

AUD/USD 0.9064 H: 0.9072 L: 0.8973

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.8735 0.8893 0.9000 0.9119 0.9229 0.9369

 

  • AUD/USD has posted strong gains in Thursday trading. The pair broke above the key 0.90 line in Asian trading and continues to move higher.
  • On the upside, 0.9119 is providing resistance. This is followed by resistance at 0.9229.
  • 0.9000 has switched to a support role as the Aussie moves higher. The next support line is 0.8893.
  • 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 has reversed directions on Thursday, pointing to gains in long positions. This is consistent with what we are seeing from the pair, as the Aussie has moved sharply 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.

Buoyed by strong domestic data on Thursday, the Aussie barreled above the 0.90 level. In the North American session, the Australian dollar continues to put pressure on the US currency.

 

AUD/USD Fundamentals

  • 00:00 US FOMC Member Richard Fisher Speaks.
  • 00:30 Australian Retail Sales. Estimate 0.5%. Actual 1.2%.
  • 00:30 Australian Trade Balance. Estimate 011B. Actual 1.43B.
  • 12:30 US Challenger Job Cuts. Actual -24.4%.
  • 13:15 US FOMC Member William Dudley Speaks.
  • 13:30 US Unemployment Claims. Estimate 336K. Actual 323K.
  • 13:30 US Revised Nonfarm Productivity. Estimate 2.6%. Actual 1.8%.
  • 13:30 US Revised Unit Labor  Costs. Estimate -1.0%. Actual -0.1%.
  • 15:00 US Factory Orders. Estimate -0.4%.
  • 15:30 US Natural Gas Storage. Estimate -134B.
  • 18:00 US FOMC Member Charles Plosser 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.