AUD/USD: Aussie Firm on Mixed US Data

AUD/USD has edged higher on Friday, as the pair trades in the high-0.93 range in the European session. On Thursday, US Unemployment Claims looked sharp and the Philly Fed Manufacturing Index soared. However, Building Permits and Housing Starts softened in June. Friday’s highlight is US Preliminary UoM Consumer Sentiment, with the markets expecting a strong reading. There are no Australian releases on Friday.

US Unemployment Claims dropped slightly to 302 thousand, beating the estimate of 310 thousand. This figure marks a seven-week low, as the economy continues to churn out impressive employment data. With Janet Yellen telling Congress that a rate hike could be pushed forward if inflation and employment data exceeds expectations, improving employment data will put more pressure on the Fed to raise rates. At the same time, the housing sector is struggling, and Building Permits fell to 0.96 million, its lowest level since January. The markets had expected a much stronger reading, with an estimate of 1.04M. Housing Starts followed suit, coming in at 0.89 million, compared to an estimate of 1.02 million. Finally, the Philly Fed Manufacturing Index sparkled, jumping to 23.9 points, well above the estimate of 15.6 and its best showing since February 2011.

Federal Reserve Chair Janet Yellen concluded two days of testimony on Capitol Hill on Wednesday, testifying before the House Financial Services Committee. Yellen declined to answer questions about when the Fed would begin to raise rates, but she did acknowledge that most economists expect the Fed to make a move in the third quarter of 2015. On Tuesday, the dollar moved higher when Yellen said that the economy still required monetary stimulus, but rates could increase sooner than expected if inflation and job numbers improved more quickly than anticipated. The Federal Reserve’s asset purchase program (QE) has flooded the economy with over $2 trillion, keeping interest rates at ultra-low levels, but the Fed has been trimming the program since last December, when it stood at $85 billion/month. Currently, the Fed is pumping $45 billion/month into the economy, and the next taper is expected in August, with plans to terminate QE in October.

In Australia, the important CB Leading Index continues to struggle, as the indicator posted a weak gain of 0.2% last month. This was the first reading above the zero level since March. NAB Quarterly Business Confidence came in at 6 points in the second quarter. This was down from the previous reading of 7 points, which was upwardly revised from a previously estimated reading of 6 points. Despite the unimpressive readings, the Aussie is holding its own against the US dollar, as it trades close to the 0.94 level.

AUD/USD for Friday, July 18, 2014

AUD/USD July 18 at 10:35 GMT

AUD/USD 0.9383 H: 0.9390 L: 0.9338

AUD/USD Technical

• AUD/USD pushed higher late in the Asian session and this trend has continued in the European session.
• On the downside, 0.9361 is under pressure. There is stronger support at 0.9229.
• 0.9446 is the next resistance line. This is followed by resistance at 0.9617.

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 short positions in Friday trade, continuing the direction seen a day earlier. This is not consistent with the movement of the pair, as the Australian dollar has made gains. The ratio currently is split between open long and short positions, indicative of a lack of trader bias as to where AUD/USD is headed.

AUD/USD Fundamentals

• 13:55 US Preliminary UoM Consumer Sentiment. Estimate 83.5 points.
• 13:55 US Preliminary UoM Inflation Expectations.
• 14:00 US CB Leading Index.  Estimate 0.6%.

* 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.