AUD/USD – Energized Aussie Above 74, Australian Business Confidence Next

The Australian dollar rally continues on Monday, as AUD/USD has posted slight gains. In the European session, the pair is trading at 0.7420. Australian indicators started the week on a sour note, as the AIG Construction Index posted a weak reading of 46.1 points, while ANZ Job Advertisements disappointed with a decline of 1.2%. Later in the day, we’ll get a look at NAB Business Confidence. In the US, there are two minor indicators to start the week – the Labor Market Conditions Index and Consumer Credit.

The Aussie posted its strongest week in months, surging over 300 points against its US counterpart. AUD/USD pushed above the 0.74 line on Friday, as the US dollar took a hit following a surprise decline in US wage growth. AUD/USD has struggled in recent months, hard hit by the China slowdown and uncertainty in the markets with the plunge in oil prices. However, the pair has posted an impressive rally and is currently trading close to 7-month highs, as investors appear to have become more comfortable holding risk assets like the Australian currency. The markets will get a look at Business Confidence on Monday and Consumer Sentiment a day later, so we could see some volatility from AUD/USD if these indicators surprise the markets.

US Nonfarm Payrolls surged to 242 thousand in January, much higher than the estimate of 195 thousand. This marked an impressive jump from the previous reading of 171 thousand. The US economy has added an average of 225,000 jobs per month since December, an impressive number considering that the economy has softened in the early part of 2016. Still, employment news was mixed, as wage growth declined by 0.1%, shy of the estimate of a 0.2% gain. This marked the first drop in wages since December 2014. This indicator is closely linked to inflation, since an increase in wages means workers have more money to spend. The indicator’s decline underscores that that Federal Reserve’s inflation target of about 2.0% remains far off, so the Fed, which is keeping a close eye on the weak inflation picture, is unlikely to raise rates trigger at its policy meeting later this month.

AUD/USD Fundamentals

Sunday (March 6)

  • 5:30 Australian AIG Construction Index. Actual 46.1 points
  • 19:30 Australian ANZ Job Advertisements. Actual -1.2%

Monday (March 7)

  • 10:00 US Labor Market Conditions Index
  • 13:00 US FOMC Member Lael Brainard Speaks 
  • 13:00 US FOMC Member Stanley Fischer Speaks 
  • 15:00 US Consumer Credit. Estimate 16.8B 
  • 18:20 RBA Deputy Governor Philip Lowe Speaks
  • 19:30 Australian NAB Business Confidence

*Key releases are highlighted in bold

*All release times are EST

AUD/USD for Monday, March 7, 2016

AUD/USD March 7 at 7:55 EST

AUD/USD  Open: 0.7406 Low: 0.7392  High: 0.7430 Close: 0.7425

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.7100 0.7213 0.7385 0.7472 0.7560 0.7678
  • AUD/USD was flat in the Asian session and has posted small gains in European trade
  • There is resistance at 0.7472
  • 0.7385 has switched to a support role following strong gains by AUD/USD on Friday
  • Current range: 0.7385 to 0.7472

Further levels in both directions:

  • Below: 0.7385, 0.7213, 0.7100 and 0.7012
  • Above: 0.7472, 0.7560 and 0.7678

 

OANDA’s Open Positions Ratio

The AUD/USD ratio shows long positions command a majority (56%), which is indicative of trader bias towards AUD/USD continuing to move higher.

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.