AUD/USD – Sinking Aussie Fights to Stay Above 90 Line

Last week was one to forget for the slumping Aussie, as the currency coughed up more than 300 points to the surging US dollar. On Monday, AUD/USD is stable, as the pair trades slightly above the psychologically significant 0.90 level. On the release front, Australian New Motor Vehicle Sales stalled, posting a decline of 1.8% last month. The markets are keeping a close eye on the RBA minutes, which will be released early on Tuesday. In the US, the Empire State Manufacturing Index jumped to 27.5 points in August, well above expectations.

US numbers wrapped up last week on a high note. Core Retail Sales improved to 0.3%, edging above the estimate of 0.2%. Retail Sales posted a nice gain of 0.6%, well above the estimate of 0.3%. There was excellent news from the UoM Consumer Sentiment, which bounced back from a weak reading in July and improved to 84.6 points, its best showing since November 2012. The forecast stood at 83.2 points. These indicators point to an increase in consumer confidence and spending, which underscore a deepening economic recovery.

US employment data disappointed on Thursday. Unemployment Claims rose to 315 thousand, the largest number of claims in 10 weeks. The reading was much higher than the estimate of 306 thousand. This follows soft numbers from JOLTS Job Openings and a dismal Nonfarm Payrolls last week. The troubling job numbers are unlikely to affect the Fed’s plan to continue trimming QE later this week, but a soft labor market could postpone plans to raise interest rates by mid-2015.

Australian employment numbers made headlines last week, as Employment Change posted an incredible gain of 121,000 last month, crushing the estimate of 15,000. The markets are having some difficulty accepting these stratospheric figures at face value, with one Australian analyst noting that the numbers are “somewhat difficult to interpret”. The Australian statistics bureau claimed that a rotation in its survey group affected the August figures, and we’re likely to hear more about the authenticity of these numbers in the next few days. There were no doubts about the veracity of the unemployment rate, which dipped to 6.1%, beating the estimate of 6.3%. The Aussie posted gains after the employment releases but then retracted and continued to head southward.

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. 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 sputtering economy.

AUD/USD for Monday, September 15, 2014

AUD/USD September 15 at 14:40 GMT

AUD/USD 0.9032 H: 0.9050 L: 0.8984

AUD/USD Technical

• AUD/USD was uneventful in the Asian session. The pair edged higher in European trading and is unchanged in the North American session.
• 0.9020 remains an immediate support level. 0.8953 is stronger.
• On the upside, 0.9119 is a strong resistance line.
• Current range: 0.9020 to 0.9119

Further levels in both directions:

• Below: 0.9020, 0.8953, 0.8820 and 0.8860
• Above: 0.9119, 0.9229, 0.9361, 0.9446 and 0.9617

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in long positions on Monday. This is consistent with the pair’s movement, as the Australian dollar has posted small gains. The ratio continues to have a majority of long positions, indicative of trader bias towards the Australian dollar continuing to move higher.

AUD/USD Fundamentals

• 1:30 Australian New Motor Vehicle Sales. Actual -1.8%.
• 12:30 US Empire State Manufacturing Index. Estimate 16.4 points. Actual 27.5 points.
• 13:15 US Capacity Utilization Rate. Estimate 79.3%. Actual 78.8%.
• 13:15 US Industrial Production. Estimate 0.4%. Actual -0.1%.

* 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.