AUD/USD – Aussie Firm Ahead of Business Confidence

AUD/USD is steady on Monday, as the pair trades in the mid-0.92 range. On the release front, it’s a very quiet start to the week, with no data out of Australia or the US. Today’s sole event is a speech from Federal Reserve Governor Stanley Fischer, who spoke at a conference in Stockholm. Things get busy early Tuesday, with Australia releasing business confidence and inflation data.

The RBA released its monetary policy statement on Friday, and there wasn’t much good news for the markets. The statement noted that the RBA has lowered its forecast for GDP of 2-3% in the year through June 2015, down from 2.25-3.25% in the May projection. Following suit, the forecast for core inflation dropped from 1.75-2.75%, down from 2.25-3.25%. The RBA added that the unemployment rate was likely to “remain elevated for some time”. Australia’s unemployment rate, which jumped in July, leaped above the US rate for the first time since 2007. This underscores a divergence in monetary policy outlook between the two countries – the US is expected to raise rates next year, while the RBA is unlikely to take similar action if the economy doesn’t improve. The RBA statement also took note of the high value of the Australian dollar, which has gained about 6% since February.

In Australia, key employment data was dismal last week. Employment Change came in at -0.3 thousand, well off the estimate of +13.5 thousand. As well, the unemployment rate jumped to 6.4%, up from 6.0%. The markets had expected unemployment levels to remain unchanged. Earlier in the week, the RBA held interest rates at 2.50%. The rate has been pegged at this low level since July 2013.

US releases enjoyed a solid week, led by the ISM Non-Manufacturing PMI and Unemployment Claims. The PMI, which measures the strength of the services sector, climbed to 58.6 points, a ten-month high. Unemployment Claims dropped to 289 thousand, beating the estimate of 305 thousand. The four-week claims average, which is less volatile than the weekly count, dipped to 293,500, its lowest level since February 2006. The improving US labor market points to a growing economy, and the US dollar has gained broad strength thanks to solid economic data.

AUD/USD for Monday, August 11, 2014

AUD/USD August 11 at 14:35 GMT

AUD/USD 0.9265 H: 0.9286 L: 0.9260

AUD/USD Technical

• AUD/USD has shown little movement during the day and remains rangebound.
• On the downside, 0.9229 is an immediate support line. 0.9119 is stronger.
• 0.9361 is the next resistance line.
• 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 short positions on Monday. This is consistent with the movement of the pair, as the Australian dollar has posted small losses. The ratio has a majority of long positions, indicative of trader bias towards the Australian dollar moving to higher ground.

AUD/USD Fundamentals

• 7:15 US Federal Reserve Governor Stanley Fischer Speaks.

* Key releases are highlighted in bold

*All release times are GMT

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