AUD/USD: Steady as Aussie Data Improves

AUD/USD is stable on Monday, as the pair trades quietly in the mid-0.93 range late in the European session. There was positive news out of Australia to kick off the week, as the AIG Construction Index pushed above the 50-point level for the first time in 2014. This threshold separates between contraction and expansion. As well, ANZ Job Advertisements, an important gauge of employment activity, jumped 4.3% in June, a four-month high. Later in the day, we’ll get a look at NAB Business Confidence. There are no US releases on Monday.

US employment numbers were the perfect prelude to a long holiday weekend in the US, as Nonfarm Payrolls and the Unemployment Rate sparkled. Nonfarm Payrolls, one of the most important indicators, bounced back in June with a strong gain of 288 thousand new jobs. This crushed the estimate of 214 thousand. Unemployment Claims was steady at 315 thousand, almost replicating the estimate of 314 thousand. There was more good news from the Unemployment Rate, which continues to move downward. The indicator dipped to 6.1%, its lowest level since September 2008. The strong employment numbers are sure to increase speculation about an interest rate hike by the Federal Reserve, and we can expect the markets to be closely attuned to remarks from Federal Reserve policymakers.

In Australia, key data was a mix late last week. Building Approvals broke a nasty streak of three consecutive declines and jumped 9.9% in June. However, Retail Sales, the primary gauge of consumer spending, posted a decline of -0.5%, missing the estimate of 0.0%. RBA head Glen Stevens took a swipe at the high-flying Aussie, saying that the currency remains overvalued. The RBA has repeatedly tried to talk down the Aussie, but this hasn’t worked, as the Australian dollar continues to trade at high levels, and there has even been talk of the currency reaching parity with the US dollar.

Australian Trade Balance is closely linked to currency demand, as foreigners need to purchase Australian dollars to pay for Australian exports. The indicator posted a deficit of $1.91 billion, surprising the markets, which had expected a small deficit of $0.16 billion. Meanwhile, there were no surprises from the RBA, which held the course, maintaining the benchmark interest rate at 2.50%. The central bank has pegged the rate at this level since last August. The RBA has been trying to revive the economy with low-level rates, with limited success.

 

AUD/USD for Monday, July 7, 2014

AUD/USD July 7 at 12:50 GMT

AUD/USD 0.9366 H: 0.9370 L: 0.9342

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.9119 0.9229 0.9361 0.9446 0.9617 0.9757

 

  • AUD/USD has shown little movement throughout the day. The pair touched a low of 0.9342 in the Asian session and has since moved higher.
  • The pair is testing support at 0.9361. There is stronger support at 0.9229.
  • 0.9446 is the next resistance line.

Further levels in both directions:

  • Below: 0.9361, 0.9229, 0.9119 and 0.9000
  • Above: 0.9446, 0.9617, 0.9757 and 0.9842

 

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in long positions in Monday. This is consistent with the movement of the pair, as the Australian dollar has posted small gains. The ratio has a majority of long positions, indicative of trader bias towards the Australian dollar posting gains.

AUD/USD Fundamentals

  • 9:30 Australian NAB Business Confidence.

*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.