AUD/USD – Aussie Slide Expected to Continue in 2015

AUD/USD showed little change on Wednesday, as the pair closed at 0.8170. Australian and US markets are closed on Thursday for the New Year’s holiday. Both markets will resume action on Friday, highlighted by US ISM Manufacturing PMI.

The Australian dollar had little to cheer about in 2014. The currency started the year above the 0.89 line, but fell an astounding 750 points, closing 2014 at 0.8160. The Aussie lost almost 300 points December alone, as AUD/USD is currently trading at its lowest level since June 2010. Despite the Aussie’s huge losses in 2014, analysts still consider the currency overvalued against the US dollar and are forecasting that the Australian dollar will lose more ground in 2015. The RBA has repeatedly stated that a strong Australian dollar is hurting the economy, and RBA Governor Glenn Stevens recently said that he would like to see the currency at 75 US cents.

US releases were a mix on the last day of 2014. Unemployment Claims surprised with a sharp rise, coming in at 298 thousand, compared with 280 thousand in the previous reading. The estimate stood at 287 thousand. On the housing front, Pending Home Sales bounced back from a decline in the previous reading, posting a gain of 0.8% in December. This beat the forecast of 0.6%. The news was not as good from Chicago PMI, which dropped to 58.3 points, its worst showing since June. The reading fell short of the estimate of 60.2 points.

With the US economy showing better numbers as we head into 2015, the US consumer is showing more optimism about the economy. On Tuesday, CB Consumer Confidence rose to 92.6 points, up from 88.8 points a month earlier. Although this missed the estimate of 94.6, this was a solid reading which follows last week’s UoM Consumer Sentiment report. That indicator has been on an upward swing and hit 93.6 points in December, its highest level since February 2007. Consumer confidence numbers are closely watched by analysts, as increased confidence should translate into more spending by consumers, creating more jobs and strengthening economic activity.

AUD/USD for Thursday, January 1, 2015

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.7904 0.8081 0.8150 0.8214 0.8315 0.8456

 

  • AUD/USD was marked by choppy movement in light trade on Wednesday. The pair tested resistance at 0.8214 in the Asian session.
  • 0.8150 remains a weak support line. 0.8081 is stronger.
  • 0.8214 is a weak resistance line. 0.8315 is stronger.
  • Current range: 0.8150 to 0.8214.

Further levels in both directions:

  • Below: 0.8150, 0.8081, 0.7904, 0.7799 and 0.7701
  • Above: 0.8214, 0.8315, 0.8456 and 0.8550

 

OANDA’s Open Positions Ratio

AUD/USD ratio has a majority of long positions, indicative of trader bias towards AUD/USD breaking out of range and moving higher.

AUD/USD Fundamentals

  • There are no Australian or US releases on Monday.

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.