AUD/USD – Aussie Dive Continues as Westpac Consumer Sentiment Sinks

The Australian dollar continues to slide, as AUD/USD trades at the 0.92 line late in the European session on Wednesday. The Aussie has endured an awful week, losing over 200 points, and trading at its lowest level since March. The pair took a hit after the release of Westpac Consumer Sentiment, which posted a sharp decline of 4.6% last month. Traders should be prepared for some activity from the pair early on Thursday, with the release of Australian Employment Change. The markets are expecting a strong showing from the indicator. In the US, there are no major releases on Wednesday’s schedule.

Confidence in the Australian economy appears to be waning, according to the latest business and consumer confidence data. Westpac Consumer Sentiment had been steadily improving, but the upswing came to a crashing halt as the indicator slipped by 4.6% in August. This marked a 4-month low. Earlier this week, NAB Business Confidence, a key indicator, slipped to 8 points in August, compared to 11 points a month earlier. Weak business and consumer confidence in Australia’s economy could translate into decreased spending by consumers and businesses, which would be grim news for the weak economy.

The Australian dollar is sensitive to key Chinese releases, as China is Australia’s biggest trading partner. Chinese trade surplus hit a record high in August, climbing to $49.8 billion, easily beating the estimate of $40.8 billion. Stronger Chinese exports should translate into increased demand for Australian raw materials, which bodes well for the Australian export sector and the Aussie. We’ll get a look at additional key Chinese numbers during the week, with the release of CPI and Industrial Production. The Australian dollar could recover some ground if these releases beat expectations.

US numbers continue to point to a deepening recovery, but the labor market is showing some signs of trouble. JOLTS Job Openings was unchanged in August at 4.67 million, short of the estimate of 4.72 million. On Friday, the eagerly-anticipated Nonfarm Employment Change crashed to 142 thousand, its lowest gain since January. This surprised the markets, which had expected a gain of 226 thousand. The disappointing release follows a weak ADP Nonfarm Payrolls report as well as a rise in unemployment claims.

 

AUD/USD for Wednesday, September 10, 2014

AUD/USD September 10 at 14:40 GMT

AUD/USD 0.9149 H: 0.9217 L: 0.9113

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.8953 0.9020 0.9119 0.9229 0.9361 0.9446

 

  • AUD/USD posted strong losses in the Asian session. The pair has steadied in the European session.
  • On the downside, 0.9119 has weakened and is under pressure as the pair trades at lower levels. 0.9020 is stronger.
  • 0.9229 is a strong resistance line.
  • Current range: 0.9119 to 0.9229

Further levels in both directions:

  • Below: 0.9119, 0.9020, 0.8953 and 0.8820
  • Above: 0.9229, 0.9361, 0.9446 and 0.9617

 

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in short positions on Wednesday, reversing the direction seen a day earlier. This is consistent with the pair’s movement, as the Australian dollar continues to lose ground. The ratio continues to have a majority of long positions, indicative of trader bias towards the Australian dollar reversing directions and moving higher.

 

AUD/USD Fundamentals

  • 1:30 Australian Westpac Consumer Sentiment. Actual -4.6%.
  • 14:00 US Wholesale Inventories. Estimate 0.5%.
  • 14:30 US Crude Oil Inventories. Estimate -1.0M.
  • 17:01 US 10-year Bond Auction.

* 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.