AUD/USD – Under Pressure as Building Approvals Tumbles

AUD/USD has posted slight losses on Monday, as the pair trades just above the 0.87 line early in the North American session. On the release front, Australian Building Approvals plunged 11.0% in September. Australian ANZ Job Advertisements slipped to 0.2%. In the US, today’s highlight is ISM Manufacturing PMI. The markets are expecting little change in the upcoming release, with an estimate of 56.5 points.

Australian releases started off the week on a dismal note, as Building Approvals slid by 11.0%, its worst showing since July 2012. The markets had expected a slight decline of 0.9%. The key indicator tends to show strong fluctuations, often leading to readings which are well off the mark. There was no relief from ANZ Job Advertisements, which dropped to 0.2%, down from 0.9% a month earlier. This marked a five-month low for the important employment indicator.

It was another solid performance from US GDP on Thursday, which posted a strong gain of 3.5% in Q3, ahead of the estimate of 3.1%. Although this was short of the Q2 reading of 4.0%, the two readings mark the strongest six-month gain we’ve seen in ten years. Unemployment Claims increased slightly to 287 thousand, slightly higher than the previous reading of 284 thousand. However, the four-week average remains at multi-year lows, pointing to an improving labor market.

The US dollar posted strong gains on Wednesday, boosted by a hawkish Federal Reserve policy statement. The Fed said that the labor market is strengthening and inflation remains on target, although it did note that the labor market participation rate remains low. As expected the Fed completed the taper of its QE3 program. The asset-purchase program was initially started in 2008, at the height of the economic crisis, in order to boost a weak US economy. The termination of the QE is a symbolic step which is a vote of confidence from the powerful Fed that the US economy is on the right track.

AUD/USD for Monday, November  3, 2014

AUD/USD November 3 at 14:15 GMT

AUD/USD 0.8712 H: 0.8761 L: 0.8704

 

AUD/USD Technical

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

 

  • AUD/USD posted gains in the Asian session but gave these up in European trade.
  • 0.8763 is a weak resistance line. 0.8820 is stronger.
  • 0.8668 is an immediate support line. 0.8550 is next.
  • 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 Monday. This is consistent with what we’re seeing from the pair, as the Australian dollar has posted losses. The ratio has a majority of long positions, indicative of trader bias towards AUD/USD changing direction and moving higher.

 

AUD/USD Fundamentals

  • 00:30 Australian Building Approvals. Estimate -11.0%. Actual -0.9%.
  • 00:30 Australian ANZ Job Advertisements . Actual 0.2%.
  • 5:30 Australian Commodity Prices. Actual -16.9%.
  • 14:45 US Final Manufacturing PMI. Estimate 56.1 points.
  • 15:00 US ISM Manufacturing PMI. Estimate 56.5 points.
  • 15:00 US Construction Spending. Estimate 0.8%.
  • 15:00 US ISM Manufacturing Prices. Estimate 58.3 points.
  • All Day – US Total Vehicle Sales. Estimate 16.6M.

* 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.