AUD/USD – Aussie Flirts with 71 Line, Australian Business Confidence Next

The Australian dollar is flat on Monday, trading just shy of the 0.71 line in the European session. On the release front, there are no major events out of the US to start off the week. In Australia, ANZ Job Advertisements posted a gain of 1.0%. Later in the day, the markets will get a look at NAB Business Confidence, a key release which could affect the movement of AUD/USD.

Last week, the RBA issued its quarterly policy statement, sounding cautious, but somewhat optimistic. The central bank said that the Australian economy was benefiting from low inflation, stronger employment and a weaker Australian dollar. Growth is expected to remain steady in 2016, between 2.5 and 3.5 percent. On the monetary front, the RBA repeated its easing bias which it spelled out when it held interest rates at 2.00%. Policymakers also noted concern about the economic slowdown gripping China, which is Australia’s largest trading partner. The statement said that further fallout from China could “adversely affect commodity prices including those that are important to Australia”, a clear reference to the Australian export sector which has been hurt by weaker Chinese demand.

The Australian dollar jumped on the greenback selloff last week, taken full advantage of weak US numbers, notably employment data. On Wednesday, ADP Nonfarm Payrolls dropped to 205 thousand in January, much weaker than 257 thousand a month earlier. There was further weak data from ISM Non-Manufacturing PMI, a key gauge of the services sector. The index dipped to 53.2 points in January, its worst showing since March 2014. US Nonfarm Payrolls were also weak, coming in at just 151 thousand, compared to the forecast of 189 thousand. However, the Aussie coughed up over 100 points on Friday, as Australian Retail Sales dropped to 0.0%, well off the estimate of 0.5%. This marked a five-month low for this key indicator.

AUD/USD Fundamentals

Sunday (Feb. 7)

  • 19:30 Australian ANZ Job Advertisements. Actual 1.0%

Monday (Feb. (8)

  • 10:00 US Labor Market Conditions Index
  • 19:30 Australian NAB Business Confidence

*Key events are in bold

*All release times are EST

AUD/USD for Monday, February 8, 2016

AUD/USD February 8 at 7:00 EST

AUD/USD  Open: 0.7084 Low: 0.7092  High: 0.7129  Close: 0.7087

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.6848 0.6931 0.7012 0.7100 0.7213 0.7385
  • The pair has shown some choppiness, as the 0.71 line remains busy. It is currently a weak resistance line.
  • 0.7012 is providing support. protecting the round number of 0.7000
  • Current range: 0.7012 to 0.7100

Further levels in both directions:

  • Below: 0.7012, 0.6931 and 0.6848
  • Above: 0.7100, 0.7213 and 0.7385

OANDA’s Open Positions Ratio

AUD/USD ratio has shown some movement towards long positions, as sharp losses by the pair on Friday led to the covering of short positions. Long positions have a slight majority (54%), indicative of trader bias towards the pair gaining ground.

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.