AUD/USD – Quiet as Australian Retail Sales Steady, US Posts Positive Job Data

The Australian dollar is uneventful on Friday, as AUD/USD trades at the 0.73 line at the start of the North American session. In economic news, Australian Retail Sales posted a gain of 0.5%. In the US, Nonfarm Payrolls beat expectations with a gain of 211 thousand. Unemployment Rate held steady at 5.0% and Average Hourly Earnings dipped to 0.2%, as both releases matched their estimates.

It has been an excellent week for the Australian dollar, which has posted gains of 130 points and is trading at 7-week highs against the US dollar. Australia wrapped up the week with Retail Sales, the primary gauge of consumer spending. The key indicator posted a respectable gain of 0.5% in November, edging above the forecast of 0.4%. Retail Sales remains steady, as the previous two readings came in at 0.4%. Earlier in the week, 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.

US Nonfarm Payrolls fell to 211 thousand in November, but this still beat the estimate of 201 thousand. This indicator is often a market-mover, and the positive reading will lend support to Federal Reserve policymakers who are in favor of raising interest rates later this month. The Federal Reserve will obviously not confirm a widely-expected rate hike, but Fed chair Janet Yellen testified on Capitol Hill on Thursday, and signaled that a rate increase is likely in December, barring some unforeseen weak economic data before the rate decision on December 16. Earlier in the week, Yellen added that the Fed is satisfied with the progress shown by the US labor market. Persistently low inflation levels have hampered the recovery and are well below the Fed target of 2 percent, and is a key reason why the Fed did not raise rates earlier this year. However, Yellen stated that she expects inflation numbers to improve, so weak inflation may no longer be an impediment to an historic rate hike.

This week’s US PMI reports, key gauges of economic activity, failed to impress. On Tuesday, ISM Manufacturing PMI slipped to 48.6 points in November. This figure fell short of the estimate of 50.6 points, and marked the first contraction of the index since May 2013. Recent manufacturing releases were also soft, as the US manufacturing sector continues to struggle. There wasn’t any relief from ISM Non-Manufacturing PMI on Thursday, as the index slipped to 55.9 points, well short of the forecast of 58.1 points. This marked a six-week low for the indicator. The silver lining is that although the index took a hit in November, the reading was still above the 50 line, indicative of expansion.

AUD/USD Fundamentals

Friday (Dec. 4)

• 00:30 Australian Retail Sales. Estimate 0.4%. Actual 0.5%
• 13:30 US Average Hourly Earnings. Estimate 0.2%. Actual 0.2%.
• 13:30 US Nonfarm Employment Change. Estimate 201K. Actual 211K.
• 13:30 US Unemployment Rate. Estimate 5.0%. Actual 5.0%.

*Key releases are highlighted in bold

*All release times are GMT

AUD/USD for Friday, December 4, 2015

AUD/USD December 4 at 13:30 GMT

AUD/USD 0.7325 H: 0.7347 L: 0.7302

AUD/USD Technical

• 0.7213 continues to provide strong support.
• On the upside, 0.7349 is under strong pressure.
• 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 continue to retain a slight majority (54%). 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.