AUD/USD – Little Movement Ahead of US Inflation, Consumer Confidence

AUD/USD is listless on Friday, as the pair trades slightly above the 0.82 line. On the release front, it’s another busy day in the US, highlighted by CPI and the UoM Consumer Sentiment. There are no Australian releases on Friday.

There was good news from Australian job data on Thursday. Australian Employment Change, a key indicator, was much stronger than expected, with a gain of 37.4 thousand. This crushed the estimate of 5.3 thousand. The unemployment rate also looked sharp, dropping from 6.3% to 6.1%. The markets had expected the rate to remain the same. The strong numbers means that the RBA faces less pressure to reduce interest rates, which have been pegged out 2.50% since July 2013. The RBA has been reluctant to lower rates, despite some calls to do so in order to give the economy a boost.

US employment numbers slipped on Thursday, as Unemployment Claims surprised with a reading of 316 thousand. This was well above the estimate of 299 thousand and was the highest reading since June 2014. However, the first full week of the year often shows a spike in claims, since holiday workers are dismissed, resulting in a higher number of claims. Elsewhere, PPI posted a decline of 0.3%, matching the forecast. Manufacturing data was mixed, as the Empire State Manufacturing Index rose to 10.3 points, while the Philly Fed Manufacturing Index slipped to 6.3 points, its worst showing in 11 months.

Currency markets were in turmoil on Thursday, as the Swiss National Bank suddenly terminated its cap on the exchange rate between the euro and the franc, which was set a floor of 1.20 for EUR/CHF. The cap had been in place since 2011, and the move marks a major policy reversal for the normally conservative Swiss central bank. Market reaction was swift, as the euro dropped some 15% against the franc and slipped 160 points against the US dollar. Why the dramatic move by the Swiss? One reason is an attempt to fight deflation, which is hurting the Swiss economy. As well, the SNB has been buying large amounts of euros to keep EUR/CHF within the cap, and with the euro having fallen to 10 years low, the central bank may have soured on the common currency.

AUD/USD for Friday, January 16, 2015

AUD/USD January 16 at 12:45 GMT

AUD/USD 0.8219 H: 0.8256 L: 0.8208

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.8081 0.8150 0.8214 0.8315 0.8456 0.8547

 

  • AUD/USD has shown limited movement in the Asian and European sessions, as the pair trades just above support at 0.8214.
  • 0.8315 is a strong resistance line.
  • On the downside, 0.8214 is under strong pressure. 0.8150 is next.
  • Current range: 0.8214 to 0.8315.

Further levels in both directions:

  • Below: 0.8214, 0.8150, 0.8081, 0.7904 and 0.77
  • Above: 0.8315, 0.8456, 0.8547 and 0.8682

 

OANDA’s Open Positions Ratio

AUD/USD ratio is almost unchanged on Friday. This is consistent with the lack of movement currently displayed by the pair. The ratio has a majority of long positions, indicative of trader bias towards AUD/USD moving higher.

AUD/USD Fundamentals

  • 13:30 US CPI. Estimate -0.3%.
  • 13:30 US Core CPI. Estimate 0.1%.
  • 14:15 US Capacity Utilization Rate. Estimate 80.2%.
  • 14:15 US Industrial Production. Estimate 0.1%.
  • 14:55 US Preliminary UoM Consumer Sentiment. Estimate 94.2 points.
  • 14:55 US Preliminary UoM Inflation Expectations.
  • 16:00 US FOMC Member John Williams Speaks.
  • 21:00 US TIC Long-Term Purchases. Estimate 27.3B.

*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.