AUD/USD – Rangebound To Start Off Week

AUD/USD is showing little movement on Monday, as the pair trades in the mid-0.90 range in the European session. On Friday, Nonfarm Payrolls was a pleasant surprise, as the key employment indicator jumped to a three-month high. It’s a slow start to the new week, with no Australian releases on Monday. The sole US release today is a speech by FOMC member Charles Plosser. Last week ended on a high note, as US Nonfarm Payrolls looked sharp, hitting a three-month high.

US Nonfarm Payrolls was a pleasant surprise, as the key employment release jumped to 175 thousand in February, up from 113 thousand a month earlier. This was well above the estimate of 151 thousand. The Unemployment rate edged up to 6.7%, slightly above the estimate of 6.6%. With a solid Unemployment Claims earlier last week, the markets can breathe more comfortably as the Fed is likely to take its scissors and trim QE next week for the third time. New York Fed President William Dudley stated last week that the threshold to alter the Fed’s program to wind up QE was “pretty high”. In other words, short of a serious economic downturn in the US economy, we can expect the QE tapers to continue.

Australian releases looked sharp last week, and the Aussie responded with strong gains against the US dollar. 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. As well, GDP rose in Q4 and Building Permits also impressed.

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.

 

AUD/USD for Monday, March 10, 2014

Forex Rate Graph 21/1/13

AUD/USD March 10 at 14:00 GMT

AUD/USD 0.9038 H: 0.9064 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 is listless in Monday trading.
  • On the upside, 0.9119 has switched to a resistance role. This is followed by 0.9229.
  • 0.9000 is providing support role. This is not a strong line and could be face pressure during the week. There is stronger support at 0.8893.
  • Current range: 0.9000 to 0.9119

Further levels in both directions:

  • Below: 0.9119, 0.9000, 0.8893, 0.8735 and 0.8658
  • Above: 0.9229, 0.9361, 0.9466 and 0.9595

 

OANDA’s Open Positions Ratio

AUD/USD ratio is almost unchanged on Monday. This is consistent with what we are seeing from the pair, which is showing little activity. AUD/USD ratio is made up of a majority of long positions, reflecting a trader bias towards the Australian dollar breaking out and moving higher against the US currency.

The Australian dollar is trading quietly, with little movement in the European session.

 

AUD/USD Fundamentals

10:15 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.