AUD/USD – Aussie Jumps as Australian GDP Shines

The Australian dollar is steady on Wednesday, as AUD/USD trades slightly above the 0.73 line early the North American session. The Aussie posted strong gains following an excellent Australian GDP report. In the US, the ADP Nonfarm Payrolls easily beat expectations, posting a gain of 217 thousand. We could see further movement from the pair on Thursday, as there are a host of key events. Australia releases Trade Balance, while the US will release Unemployment Claims and the ISM Non-Manufacturing PMI. As well, Federal Reserve head Janet Yellen will testify before the Joint Economic Committee in Washington.

Australian GDP posted a strong gain of 0.9% in the third quarter, beating the estimate of 0.7%. The Aussie took full advantage of the positive report and posted gains of close to 100 points, as AUD/USD trades at its highest level in 7 weeks. Earlier in the week, the RBA held interest rates at 2.00%, and the RBA statement had an optimistic tone about the economy, helping the Australian dollar gain ground. Earlier in the week, there were no surprises from the RBA, which held interest rates at 2.00%. The central bank reiterated that it would consider cutting rates if the economy took a turn for the worse. We’ve heard this record often before, but the RBA sounded somewhat optimistic about the Australian economy, stating that “the prospects for an improvement in economic conditions had firmed a little over recent months”. Although one could argue that this was a rather tepid thumbs-up on the part of policymakers, it was still enough of a springboard for investors to snap up Australian dollars, sending the currency to higher levels.

In the US, this week’s employment numbers kicked off in style, with a strong surge from ADP Nonfarm Payrolls. The key indicator climbed to 217 thousand, easily beating the estimate of 191 thousand. This marked a sharp rebound from the previous release of 182 thousand. On Thursday, we’ll get a look at Unemployment Claims, followed by the official NFP on Friday. With the markets abuzz over continuing speculation about a rate hike later in the month, these employment releases will be under the market microscope and could result in volatility on the currency markets.

US manufacturing data has been anything but impressive in recent readings, and this was underlined by a soft reading from ISM Manufacturing PMI on Tuesday. The key index slipped to 48.6 points in November. This figure fell short of the estimate of 50.6 points, and marked the first contraction from the index since May 2013. Manufacturing data in October was also soft – the Empire State Manufacturing Index posted a dismal reading of -10.7 points, worse than the estimate of -5.3 points. This marked a fourth straight decline by the important indicator. As well, Philly Fed Manufacturing Index posted a weak gain of 1.9 points. This negative trend points to trouble in the manufacturing sector and could weigh on the US dollar.

AUD/USD Fundamentals

Wednesday (Dec.2)

• 00:30 RBA Governor Stevens Speaks
• 00:30 Australian GDP. Estimate 0.9%. Actual 0.7%
• 1:00 US FOMC Member Lael Brainard Speaks
• 13:10 US FOMC Member Dennis Lockhart Speaks
• 13:15 ADP Nonfarm Employment Change. Estimate 191K. Actual 217K
• 13:30 US Fed Chair Janet Yellen Speaks
• 13:30 US Revised Nonfarm Productivity. Estimate 2.2%. Actual 2.2%
• 13:30 US Revised Unit Labor Costs. Estimate 1.1%. Actual 1.8%
• 15:30 US Crude Oil Inventories. Estimate -0.6M
• 17:25 US Fed Chair Janet Yellen Speaks
• 19:00 US Beige Book
• 23:30 Australian AIG Services Index
• 20:40 US FOMC Member John Williams Speaks

Upcoming Key Events

Thursday (Dec. 3)

• 00:30 Australian Trade Balance. Estimate -2.61B
• 13:30 US Unemployment Claims. Estimate 269K
• 15:00 Fed Chair Janet Yellen Testifies
• 15:00 ISM Non-Manufacturing PMI. Estimate 58.1 points

*Key releases are highlighted in bold

*All release times are GMT

AUD/USD for Wednesday, December 2, 2015

AUD/USD December 2 at 15:00 GMT

AUD/USD 0.7319 H: 0.7342 L: 0.7303

AUD/USD Technical

• 0.7213 is providing strong support.
• 0.7349 is a weak resistance line and could be tested during the North American session.
• Current range: 0.7213 to 0.7349

Further levels in both directions:

• Below: 0.7213, 0.7100 and 0.7063
• Above: 0.7349, 0.7440, 0.7526 and 0.7644

OANDA’s Open Positions Ratio

AUD/USD ratio is showing little movement, as short positions have a slight majority (46%). This is indicative of a slight trader bias towards the pair moving lower.

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.