The Australian dollar has started off the trading week quietly, as AUD/USD trades at 0.7120 in the North American session. On the release front, the week started with Australian Company Operating Profits recording a sharp drop of 2.8 percent, missing expectations. On Monday, Australia releases Building Approvals, and the RBA will issue a rate statement. In the US, there are just two releases – Chicago PMI and Pending Home Sales. There are two key events on Tuesday – US ISM Manufacturing PMI and Australian GDP.
Australian company profits looked weak in the fourth quarter, sliding 2.8 percent. This was much worse than the estimate of -1.7 percent. The markets are braced for a weak release from Building Permits, with an estimate of -2.9%. Meanwhile, the RBA is not expected to make any cuts to the benchmark rate, which currently stands at 2.00%. However, the RBA has maintained an easing bias, and any hints in the RBA rate statement about a cut in rates could push the Australian currency to lower levels.
It’s been a slow start in 2016 for the US economy, with soft growth and employment numbers in comparison with the red-hot numbers which characterized the second half of 2015. One sector which has been struggling badly is the manufacturing industry. The US economy has been grappling with a downturn in global demand, which has taken its toll on the export and manufacturing sectors. A strong US dollar, which has posted broad gains in recent months, has only exacerbated the situation. However, there was some positive news late in the week. US Preliminary GDP posted a strong gain of 1.0%, well above the estimate of 0.4%. There was also positive news from the manufacturing sector, as durable goods sparkled. Core Durable Goods rose 1.8%, crushing the estimate of 0.2%. This marked the key indicator’s strongest showing since March 2014. Durable Goods Orders followed suit with a sharp rise of 4.9%, rebounding from the previous reading of -5.1%. This was stronger than the estimate of 3.0%. Meanwhile, housing numbers have not impressed, as New Home Sales slipped to 494 thousand in January, compared to 544 thousand a month earlier. This figure was well short of the estimate of 522 thousand. Pending Home Sales will be released later on Monday, with the markets expecting a gain of 0.6%. If this housing release also misses expectations, the US dollar could respond with losses.
Sunday (Feb. 28)
- 19:30 Australian Company Operating Profits. Estimate -1.7%. Actual -2.8%
Monday (Feb. 29)
- 9:45 US Chicago PMI. Estimate 52.1 points
- 10:00 US Pending Home Sales. Estimate 0.6%
- 17:30 Australian AIG Manufacturing Index
- 19:30 Australian Building Approvals. Estimate -2.9%
- 19:30 Australian Current Account. Estimate -19.8B
- 22:30 Australian Cash Rate. Estimate 2.00%
- 22:30 Australian RBA Rate Statement
- 23:30 US FOMC Member William Dudley Speaks
Upcoming Key Events
Tuesday (Mar. 1)
- 10:00 US ISM Manufacturing PMI. Estimate 48.5 points
- 19:30 Australian GDP. Estimate 0.5%
*Key releases are highlighted in bold
*All release times are EST
AUD/USD for Monday, February 29, 2016
AUD/USD February 29 at 9:10 EST
AUD/USD Open: 0.7127 Low: 0.7107 High: 0.7167 Close: 0.7122
- There is resistance at 0.7213
- The round number of 0.71 is a weak support line
- Current range: 0.7100 to 0.7213
Further levels in both directions:
- Below: 0.7100, 0.7012 and 0.6931
- Above: 0.7213, 0.7385, 7440 and 0.7533
OANDA’s Open Positions Ratio
The AUD/USD ratio is showing long positions with a majority (54%). This is indicative of trader bias towards AUD/USD moving upwards.
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.