AUD/USD – Aussie Rally Continues, US Jobless Claims Rise

The Australian dollar continues to post gains on Thursday, as AUD/USD trades at 0.7330 early in the North American session. On the release front, Australia’s trade deficit narrowed to A$2.94 billion, beating expectations. We’ll get a look at Australian Retail Sales later on Thursday, with the markets expecting a gain of 0.4%. Over in the US, Unemployment Claims climbed for a second straight week, with a reading of 278 thousand. The US will also release the ISM Non-Manufacturing PMI.

The Ausie is enjoying a superb week, posting a rally of over 200 points. AUD/USD punched over the 0.73 line earlier on Thursday, and is currently trading at its highest level since early December. The currency received a boost from GDP in the fourth quarter, which grew by 0.6%. On an annual basis, GDP growth in 2015 was 2.4%, only marginally lower than the growth rate of 2.5% in 2014. Earlier this week, there were no surprises from the RBA, which held the benchmark rate at the round number of 2.00%. The RBA statement was optimistic but cautious in tone, noting that there was “reasonable prospects for continued growth” and that the employment picture had shown improvement. Will the RBA lower rates in 2016? The central bank continues to maintain its easing bias, and analysts believe that we will see at least one rate cut this year.

US job reports are closely monitored by the markets, and a robust labor market in 2015 was a key reason that the Federal Reserve opted to raise rates in December. This year’s employment numbers have been mixed, and this has also been the trend so far this week. Unemployment Claims rose for a second straight week, rising to 278 thousand. Earlier in the week, ADP Nonfarm Payrolls improved to 214 thousand, crushing the estimate of 185 thousand. Will we see a repeat in the official Nonfarm Payrolls on Friday? A strong NFP release could revive speculation about a March rate hike by the Federal Reserve, although this scenario remains very unlikely. Meanwhile, there has been some improvement in the manufacturing sector, which has persistently posted poor numbers. Last week, durable goods reports sparkled, easily beating expectations. ISM Manufacturing PMI improved to 49.5 points in January. Although this points to contraction, this reading beat expectations and marked a four-month high. These readings have revived hopes that the worst is behind the manufacturing sector and that 2016 will bring better news to the beleaguered industry.

AUD/USD Fundamentals

Wednesday (March 2)

• 19:30 Australian Trade Balance. Estimate -3.22B. Actual -2.94B

Thursday (March 3)

• 7:30 US Challenger Job Cuts. Actual 21.8%
• 8:30 US Unemployment Claims. Estimate 271K. Actual 278K
• 8:30 US Revised Nonfarm Productivity. Estimate -3.2%. Actual -2.2%
• 8:30 US Revised Unit Labor Costs. Estimate 4.8%. Actual 3.3%
• 9:45 US Final Services PMI. Estimate 49.8.
• 10:00 US ISM Non-Manufacturing PMI. Estimate 53.2 points
• 10:30 US Factory Orders. Estimate 2.1%
• 10:30 US Natural Gas Storage. Estimate -49B
• 19:30 Australian Retail Sales. Estimate 0.4%

Friday (March 4)

• 8:30 US Average Hourly Earnings. Estimate 0.2%
• 8:30 US Nonfarm Employment Change. Estimate 195K
• 8:30 US Unemployment Rate. Estimate 4.9%
• 8:30 US Trade Balance. Estimate -43.5B

*Key releases are highlighted in bold

*All release times are EST

AUD/USD for Thursday, March 3, 2016

AUD/USD March 3 at 9:15 EST

AUD/USD  Open: 0.7286 Low: 0.7281  High: 0.7347 Close: 0.7332

AUD/USD Technical

• AUD/USD has posted steady gains throughout the day
• 0.7213 has strengthened in support as AUD/USD has posted gains
• There is resistance at 0.7385
• Current range: 0.7213 to 0.7385

Further levels in both directions:

• Below: 0.7213, 0.7100, 0.7012 and 0.6931
• Above: 0.7385, 7440 and 0.7533

OANDA’s Open Positions Ratio

The AUD/USD ratio is almost unchanged. Short positions have a slight majority (55%), which is indicative of trader bias towards AUD/USD reversing directions and 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.