AUD/USD – Aussie Slips, US Jobless Claims Next

The Australian dollar has posted considerable losses on Thursday, erasing the gains from the Wednesday session. AUD/USD is trading at 0.7550 in the European session. In economic news, the US will publish Unemployment Claims and Fed chair Janet Yellen speaks at an event in New York. In Australia, the AIG Construction Index dipped to 45.2 points, its fourth straight reading below the 50-level, indicative of ongoing contraction in the contraction industry.

RBA Governor Glenn Stevens weighed in on global currency developments this week, stating that a higher Australian dollar could hamper the economy’s recovery. Stevens hinted that the easing measures taken by other central banks had contributed to the Australian currency’s appreciation. The Aussie has surged 12 percent in the past two months against its US counterpart, to the consternation of the RBA. Will the central bank step in and lower rates next month? It’s certainly a possibility, and one key factor is the quarterly inflation report – if inflation softened in the first quarter, the RBA could feel compelled to take action and lower interest rates.

After Janet Yellen’s cautious speech in New York last week, the Federal Reserve followed suit, as the March meeting minutes were dovish. The minutes indicated that the Fed is unlikely to raise rates before June at the earliest. Although some policymakers expressed approval for a rate hike in April, others expressed concern about the risks to the US economy posed by global economic conditions. There was a split amongst members as to whether the recent pickup in inflation was sustainable. Many Fed members were worried about the lack of options available to the Fed since rates remain close to zero. This could result in significant impact on the currency markets, since the dollar could strengthen if the Fed is unable to implement effective easing measures. The minutes appear to validate Janet Yellen’s remarks last week, which were very dovish and dampened growing enthusiasm about a rate hike as early as April. Bottom line? There is a strong likelihood that the Fed will raise rates twice in 2016, but the timetable of any moves is unclear. Yellen speaks later on Thursday in New York, and the markets will be carefully monitoring her comments, looking for clues as to the Fed’s rate plans.

AUD/USD Fundamentals

Wednesday (April 6)

• 19:30 Australian AIG Construction Index. Actual 45.2 points

Thursday (April 7)

• 8:30 US Unemployment Claims. Estimate 271K
• 10:30 US Natural Gas Storage. Estimate 7B
• 15:00 US Consumer Credit. Estimate 15.0B
• 17:30 US Fed Chair Janet Yellen Speaks

*All release times are DST

AUD/USD for Thursday, April 7, 2016

AUD/USD April 7 at 8:15 DST

Open: 0.7611 Low: 0.7538 High: 0.7521 Close: 0.7530

AUD/USD Technical

• AUD/USD showed limited movement in the Asian session and has posted sharp losses in European trade
• 0.7472 is providing support
• 0.7560 is a weak resistance line
• Current range: 0.7472 to 0.7560

Further levels in both directions:

• Below: 0.7472, 0.7385 and 0.7213
• Above: 0.7560, 0.7678, 0.7796 and 0.7913

OANDA’s Open Positions Ratio

The AUD/USD ratio is showing little movement on Thursday, despite sharp losses by AUD/USD. Short and long positions are evenly split, indicative of a lack of trader bias as to which direction the pair will take next.

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.