AUD/USD – Aussie Rally Continues as RBA Holds Course

The Australian dollar continues gain ground on Tuesday, as AUD/USD trades above the 0.88 line in the North American session. The Aussie has gained about 150 points this week, recovering from sharp losses on Friday. On the release front, the RBA maintained interest rates at 2.50%. In the US, employment data remains sharp, as JOLTS Job Openings jumped to 4.84 million.

The RBA has continually complained about the high value of the Australian dollar, saying that it was impeding economic growth. After the Aussie sank in September, in which it lost some 500 points, one might have thought that the RBA would cut the currency some slack in Tuesday’s rate statement. However, the RBA did not change its tune, stating that although the Aussie has lost ground to the US, it remained high by historical standards and continues to weigh on the economy.

US job numbers continue to impress. On Tuesday, JOLTS Job Openings climbed to 4.84 million, up from 4.67 million a month earlier. The indicator is on a strong upward trend, indicative of the US employment sector. Last week, Nonfarm Employment change rebounded in September, climbing to 248 thousand. This exceeded expectations of 216 thousand. The unemployment rate dipped to 5.9%, the first time it’s been below the 6% threshold in over six years. With QE slated to end later this month, the focus will shift to the timetable for an interest rake hike. Strong employment numbers such as these could put pressure on the Fed to make an interest rate move sooner rather than later in 2015, and increased speculation about a rate move will likely boost the dollar even further.

AUD/USD for Tuesday, October 7, 2014

AUD/USD October 7 at 15:00 GMT

AUD/USD 0.8813 H: 0.8834 L: 0.8726

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.8550 0.8668 0.8763 0.8820 0.8953 0.9020

 

  • AUD/USD edged lower in the Asian session but then reversed directions and posted sharp gains, breaking past resistance at 0.8763. The Aussie continued to gain ground in the European session and briefly pushed past resistance at 0.8820. The pair is steady North American trade.
  • On the upside, 0.8220 was breached earlier but recovered. It remains a weak line. 0.8953 is stronger.
  • 0.8763 has reverted to a support role as the Australian dollar moves higher. 0.8668 is next.
  • Current range: 0.8763 to 0.8820

Further levels in both directions:

  • Below: 0.8763, 0.8668, 0.8550, 0.8456 and 0.8315
  • Above: 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 Tuesday, reversing the direction seen a day earlier. This is not consistent with the pair’s movement, as the Aussie continues to post gains. The ratio has a majority of long positions, indicative of trader bias towards AUD/USD continuing to move to higher ground.

AUD/USD Fundamentals

  • 3:30 RBA Cash Rate. Estimate 2.50%. Actual 2.50%.
  • 3:30 RBA Rate Statement.
  • 14:00 US JOLTS Job Openings. Estimate 4.71M. Actual 4.84M.
  • 14:00 US IBD/TIPP Economic Optimism. Estimate 46.3 points. Actual 45.2 points.
  • 17:20 US FOMC Member Narayana Kocherlakota Speaks.
  • 19:00 US FOMC Member William Dudley Speaks.
  • 19:00 US Consumer Credit. Estimate 20.3B.

* 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.