AUD/USD – Aussie Under Pressure After Further Losses

The Australian dollar has steadied on Thursday, after sustaining sharp losses a day earlier against the surging US dollar. AUD/USD is trading in the high-0.89 range in the North American session. In the US, Unemployment Claims improved to 280 thousand, but Building Permits softened last month. The Philly Fed Manufacturing Index fell sharply in August. As well, Fed Chair Janet Yellen will speak in Washington. The sole Australian event is the quarterly RBA Bulletin, a minor event.

US Unemployment Claims has looked sluggish over the past two readings, but that changed on Thursday, as the key indicator sparkled, dropping to 280 thousand, down sharply from 315 thousand in the previous reading. The estimate stood at 312 thousand. Building Permits was not as strong, dipping to 1.00M. This was shy of the estimate of 1.04M. There was disappointing news from the manufacturing front, as the Philly Fed Manufacturing Index slipped to 22.5 points, down from 28.0 a month earlier. The estimate stood at 22.8 points.

AUD/USD dropped over to 100 points on Wednesday following the Federal Reserve statement. The Fed statement reaffirmed that interest rates would remain ultra-low for a “considerable time” after the asset purchase scheme (QE) ends next month, but surprised the markets in hinting that once a rate hike was introduced, rate levels could move up more quickly than expected. As expected, the Fed trimmed QE by $10 billion/month, and the remaining $15 billion/month is scheduled to be phased out in October.

US inflation data was worse than expected on Wednesday. CPI, the primary gauge of consumer inflation, came in at -0.2%, its first drop since October. The estimate stood at +0.1%. Core CPI followed suit with a flat reading of 0.0%. This was the first time the index failed to post a gain since October 2010. The weak numbers follow disappointing manufacturing inflation data. PPI, a key event, dipped to just 0.0%, a 3-month low. The estimate stood at 0.1%. Core PPI slipped to 0.1%, down from 0.2% a month earlier. This matched the forecast. Low inflation continues to be a concern and could delay an interest rate hike in 2015.

Will the United Kingdom remain united on Friday? It’s anyone’s guess as Scottish voters cast their ballots in a historic referendum on independence on Thursday. The most recent polls are pointing to a close vote, with many voters still undecided. If voters do choose to secede from the UK, this would create plenty of questions and uncertainty, including what currency an independent Scotland would use and how the national debt would be divided. A vote to split up the UK could lead to turmoil in the markets and weigh heavily on the markets. Traders should treat the referendum as a market-mover, as a vote in favor of independence could have negative repercussions for the markets.

AUD/USD for Thursday, September 18, 2014

AUD/USD September 18 at 14:20 GMT

AUD/USD 0.8968 H: 0.8978 L: 0.8928

AUD/USD Technical

• AUD/USD edged higher in the Asian session and is steady in European trade.
• 0.8953 is under strong pressure and was breached earlier in the day. 0.8820 is next.
• 0.9020 has reverted to a resistance role as the Aussie trades at lower levels. 0.9119 is stronger.
• Current range: 0.8953 to 0.9020

Further levels in both directions:

• Below: 0.8953, 0.8820, 0.8763 and  0.8668
• Above: 0.9020, 0.9119, 0.9229, 0.9361 and 0.9446

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in long positions on Thursday. This is consistent with the pair’s movement, as the Aussie has posted slight gains. The ratio has a majority of long positions, indicative of trader bias towards the Aussie moving higher.

AUD/USD Fundamentals

• 1:30 RBA Bulletin.
• 12:30 US Building Permits. Estimate 1.04M. Actual 1.00M. 
• 12:30 US Unemployment Claims. Estimate 312K. Actual 280K.
• 12:30 US Housing Starts. Estimate 1.04M. Actual 0.96M.
  
• 12:45 US Federal Reserve Chair Janet Yellen Speaks.
• 14:00 US Philly Fed Manufacturing Index. Estimate 22.8 points. Actual 22.5 points.
• 14:30 US Natural Gas Storage. Estimate 91B.

* 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.