AUD/USD – Rangebound As US Markets Off For Holiday

AUD/USD is showing little movement as we start the new trading week, as the pair trades in the low-0.92 range late in Monday’s European session. It’s a very quiet day on the release front, with US markets are closed for the Memorial Day holiday. There are no Australian releases on Monday.

Australian consumers were in a sour mood in April, as Consumer Sentiment plunged 6.8%, its steepest decline since August 2011. Weaker consumer confidence usually translates into less consumer spending, a key engine of economic growth. With the recent Australian budget offering tax increases and spending cuts, the fragile Australian economy is expected to slow down, and this could hurt the Australian dollar.

US employment releases disappointed on Thursday. Unemployment Claims has looked sharp over the past two releases, but the short streak came to an end, as the key employment indicator climbed to 326 thousand, up from 297 thousand a week earlier. This missed the estimate of 312 thousand. With future QE tapers by the Federal Reserve contingent on solid economic data, key employment releases such as Unemployment Claims will continue to be closely scrutinized by the markets. Elsewhere, key housing data was a mix, as Existing Home Sales fell short of expectations, while New Home Sales improved sharply in April and easily beat the estimate.

The Federal Reserve minutes were released last week, and there was no dramatic response from the markets. In the minutes, policymakers discussed an exit strategy from its QE stimulus program, which is set to terminate at the end of 2014. This will likely mean an increase in interest rates, but the minutes didn’t provide a timetable as to when rates might go up, and by how much. Low inflation levels means there is less pressure on the Fed to raise rates next year, but the economic conditions could change in the meantime. The Federal Reserve remains comfortable with its accommodative stance, and will want to see stronger growth and employment numbers before making changes to monetary policy, such as raising rates.

 

AUD/USD for Monday, May 26, 2014

Forex Rate Graph 21/1/13

AUD/USD May 26 at 13:15 GMT

AUD/USD 0.9238 H: 0.9249 L: 0.9231

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.9000 0.9119 0.9229 0.9361 0.9446 0.9617

 

  • On the downside, 0.9229 remains under pressure. There is stronger support from 0.9119.
  • 0.9361 continues to provide strong resistance.

Further levels in both directions:

  • Below: 0.9229, 0.9119, 0.9000, 0.8893 and 0.8757
  • Above: 0.9361, 0.9446 and 0.9617 and 0.9757

 

OANDA’s Open Positions Ratio

AUD/USD ratio is almost unchanged in Monday trading. This is consistent with the movement from the pair, which is not showing any activity. The ratio has a strong majority of long positions, indicative of trader bias towards the Australian dollar breaking out of range trading and moving upwards.

AUD/USD is showing little movement on Monday. The pair is unchanged in the European session.

 

AUD/USD Fundamentals

  • There are no Australian or US releases on Monday.

 

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.