AUD/USD – Aussie Slips After Weak Retail Sales

The Australian dollar has been volatile on Wednesday, as AUD/USD lost about 80 points but then recovered. In the North American session, the pair is trading in the low 0.87 range. In  today’s releases, Australian Retail Sales fell to 0.1%, a 3-month low. In the US, ADP Nonfarm Payrolls rose 213 thousand, which was above expectations. However, ISM Manufacturing PMI dropped to 56.6 points.

The shaky Aussie was only too happy to bid adieu to the month of September, in which the currency lost close to 600 points. October didn’t start out well either, as the Aussie briefly took a tumble, courtesy of a dismal Retail Sales release. The indicator posted a paltry gain of 0.1%, down from 0.4% a month earlier. This was well off the estimate of 0.4%. The weak figure points to lower consumer spending, which would be bad news for the Australian economy.

In the US, ADP Nonfarm Payrolls surprised with a strong gain, climbing to 213 thousand, compared to 204 thousand in the previous release. This beat the estimate of 207 thousand. The ADP release precedes the official NFP release, which will be published on Friday. The markets are anticipating a sharp gain, with an estimate of 216 thousand. If the indicator does follow suit with a solid reading, the US dollar could post further gains against its major rivals. The news was not as cheery on the manufacturing front, as ISM Manufacturing PMI fell to 56.6 points, down from 59.0 points a month earlier.

Earlier in the week, US Pending Home Sales posted a decline of 1.0%, compared to last month’s gain of 3.3%. The important housing indicator has shown strong movement, resulting in readings that have been well off market estimates. US housing indicators continue to paint a mixed picture, as New Home Sales jumped last month, while Existing Home Sales softened and was well short of expectations.

AUD/USD for Wednesday, October 1, 2014

AUD/USD October 1 at 17:20 GMT

AUD/USD 0.8724 H: 0.8748 L: 0.8664

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.8456 0.8550 0.8668 0.8763 0.8820 0.8953

 

  • AUD/USD posted sharp losses in the Asian session and broke below support at 0.8668. The pair partially recovered before the end of the session. AUD/USD continued to move upwards in the Asian and European sessions and has recaptured the earlier losses. The pair is steady in the North American session.
  • 0.8668 was tested earlier but continues to provide support.
  • On the upside, 0.8763 is under pressure as the pair moves higher. 0.8820 is stronger.
  • Current range: 0.8668 to 0.8763

Further levels in both directions:

  • Below: 0.8668, 0.8550, 0.8456 and 0.8315
  • Above: 0.8763, 0.8820, 0.8953, 0.9020 and 0.9119

 

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 Aussie has posted small losses in what has been an active day. The ratio has a majority of long positions, indicative of trader bias towards AUD/USD moving to higher ground.

 

AUD/USD Fundamentals

  • 1:30 Australian Retail Sales. Estimate 0.4%. Actual 0.1%.
  • 6:30 Australian Commodity Prices. Actual -16.8%
  • 12:15 US ADP Nonfarm Employment Change. Estimate 207K. Actual 213K.
  • 13:45 US Final Manufacturing PMI. Estimate 58.0 points. Actual 57.5 points.
  • 14:00 US ISM Manufacturing PMI. Estimate 58.6 points. Actual 56.6 points.
  • 14:00 US Construction Spending. Estimate 0.5%. Actual -0.8%.
  • 14:00 US ISM Manufacturing Prices. Estimate 56.8 points. Actual 59.5 points.
  • 14:30 US Crude Oil Inventories. Estimate 0.6M. Actual -1.4M.
  • All Day – US Total Vehicle Sales. Estimate 16.9M.

* 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.