AUD/USD – Little Movement As Aussie Building Approvals Disappoints

AUD/USD is listless in Monday trade, as the pair trades in the mid-0.92 range late in the European session. In economic news, Australian Building Approvals posted a second straight decline and missed expectations. On Monday, today’s major event in the US is ISM Non-Manufacturing PMI. The markets are expecting the index to improve in the April reading. In Australia, Trade Balance will be released later on Monday.

Australian Building Approvals tends to show sharp fluctuations, often resulting in estimates that are well off the mark. In April, the key indicator posted a decline of 3.5%, well off the estimate of a gain of 1.3%. The indicator continues to struggle, with just one gain since last October.

US employment releases looked excellent on Friday. Nonfarm Payrolls jumped to 288 thousand, easily beating the estimate of 216 thousand. The Unemployment Rate kept pace, dropping to 6.3%, its lowest level since September 2008. At the same time, the participation rate in the labor force dropped, so slack remains in the US job market, despite the strong releases in April.

As expected, the Federal Reserve trimmed its QE program by $10 billion on Wednesday. This marks the fourth cut since December, reducing the asset purchase scheme to $45 billion/month. The tapers are no longer creating headlines as they did just a few months ago, and the dollar didn’t get any lift against its major rivals. What interested the markets more was the Fed statement that interest rates would remain low for a “considerable time” after QE ends. The markets expect QE to wind up before the end of the year, so we could see a rate hike in early 2015, depending of course, on the strength of the US economy and the job market.

 

AUD/USD for Monday, May 5, 2014

Forex Rate Graph 21/1/13

AUD/USD May 5 at 14:50 GMT

AUD/USD 0.9262 H: 0.9290 L: 0.9253

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.9000 0.9119 0.9229 0.9361 0.9446 0.9542

 

  • AUD/USD is showing little movement on Monday.
  • On the downside, 0.9229 is providing support. Next is 0.9119, which is protecting the key 0.9000 level.
  • 0.9361 is a strong resistance line.
  • Current range: 0.9229 to 0.9361.

Further levels in both directions:

  • Below: 0.9229, 0.9119, 0.9000 and 0.8893
  • Above: 0.9361, 0.9446, 0.9542, 0.9617 and 0.9703

 

OANDA’s Open Positions Ratio

AUD/USD ratio is almost unchanged in Monday trading. This is consistent with the lack of movement displayed by the pair. The ratio has a majority of long positions, indicative of trader bias towards the Australian dollar moving to higher ground.

AUD/USD is trading in the mid-0.92 range on Monday. The pair has edged lower in the European session.

 

AUD/USD Fundamentals

  • 1:30 Australian Trade Balance. Estimate 1.1oB.
  • 13:45 US Final Services PMI. Estimate 54.2 points.
  • 14:00 US ISM Non-Manufacturing PMI. Estimate 54.3 points.
  • Tentative – US Loan Officer Survey.

*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.