AUD/USD – Steady as US Trade Data Improves

AUD/USD is steady on Wednesday, as the pair trades in the low-0.93 range late in the European session. On the release front, the US trade deficit beat expectations, improving to a three-month low. In Australia, Wednesday’s sole release is AIG Construction Index, a minor event.

The US trade deficit unexpectedly narrowed in July, dropping to -$41.5 billion. This was the lowest deficit since April, and easily beat the estimate of $-44.2 billion. Trade data is closely linked to currency demand, since foreigners must purchase US dollars in order to by US goods and services. So, a smaller trade deficit is bullish for the US dollar.

US PMIs continue to point upwards, indicative of an improving US economy. On Tuesday, ISM Non-manufacturing PMI looked sharp, rising to 58.7 points last month. This easily beat the estimate of 56.6, and was the index’s best showing since February 2011. This follows an excellent Manufacturing PMI reading last week, with the index climbing to 57.1 points, a three-year high. There was more positive news out of the US on Tuesday, as Factory Orders had an impressive July, gaining 1.1%. These solid numbers point to healthy expansion in the US manufacturing and services sectors, which has resulted in gains for the US dollar against its major rivals.

Australian releases kicked off the week with mixed results. Retail Sales, the primary gauge of consumer spending, posted a gain of 0.6% in June, a five-month high. This easily beat the estimate of 0.3%. On the employment front, ANZ Job Advertisements posted a small gain of 0.3%, down from 4.5% a month earlier. We’ll get another look at employment data on Friday, with the release of Employment Change. If the key indicator does not meet expectations, the Aussie could lose ground.

 

AUD/USD for Wednesday, August 6, 2014

AUD/USD August 6 at 13:05 GMT

AUD/USD 0.9325 H: 0.9327 L: 0.9292

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.9020 0.9119 0.9229 0.9361 0.9446 0.9617

 

  • AUD/USD stayed close to the 0.93 line during the Asian session. The pair edged lower the European session but then bounced higher.
  • 0.9229 continues to provide strong support.
  • 0.9361 is an immediate resistance line. 0.9446 is stronger.
  • Current range: 0.9229 to 0.9361

Further levels in both directions:

  • Below: 0.9229, 0.9119 and 0.9020
  • Above: 0.9361, 0.9446, 0.9617 and 0.9757

 

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in long positions on Wednesday. This is consistent with the movement of the pair, as the Australian dollar has edged higher. The ratio has a majority of long positions, indicative of trader bias towards the Australian dollar continuing to move higher.

 

AUD/USD Fundamentals

  • 12:30 US Trade Balance. Estimate -44.2B. Actual -41.5B.
  • 14:30 US Crude Oil Inventories. Estimate -1.1M.
  • 23:30 Australian AIG Construction Index.

* 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.