AUD/USD – Aussie Subdued, Business Confidence Softens

The Australian dollar is almost unchanged on Thursday, continuing the lack of movement which marked the pair on Wednesday. AUD/USD is trading just above the 0.78 line at the start of the North American session. In economic news, Australian NAB Quarterly Business Confidence came in at 4 points in the first quarter, compared to 5 points in the previous quarter. The US releases Philly Fed Manufacturing Index and Unemployment Claims, both key indicators.

The NAB Quarterly Business Confidence dipped to 4 points in the first quarter, down from the reading of 5 points in Q4 (revised from 4 points). Although the indicator softened, it still is pointing to optimism over the economy on the part of the business sector. The Australian dollar remains strong, and has posted close to 200 points this week. Earlier this week, the RBA released the minutes of its April policy meeting. The central bank reiterated, as it has on many occasions, that it would cut rates if warranted by economic conditions. Policymakers also expressed concern about the appreciation of the Australian dollar, which has surged 9.5 percent since February 1. It should be kept in mind however, that in the past, when the RBA has felt that the Aussie is overvalued, it has tried to “talk down” the currency rather than take the drastic move of lowering interest rates. The RBA would certainly prefer an exchange rate closer to US 70 cents, but it is unlikely to cut interest rates unless inflation levels weaken.

Oil producers attended a meeting in Qatar on the weekend, hoping to reach an agreement to freeze production levels and prop up the price of oil. The gathering, which included OPEC and non-OPEC nations, ended in disarray, without any agreement being reached by the participants. There was optimism that the parties might agree to maintain current production levels, but hopes for even this limited move were dashed when Saudi Arabia insisted that any agreement had to cover Iran. When this didn’t materialize, the participants closed up shop and returned home. Although the participants failed to reach any consensus on production levels, they managed to cause plenty of volatility in the currency markets early in the week. Commodity currencies like the Canadian and Australian dollars showed sharp losses after the meeting, but have since climbed sharply as oil prices have stabilized.

AUD/USD Fundamentals

Wednesday (April 20)

• 21:30 Australian NAB Quarterly Business Confidence. Actual 4 points

Thursday (April 21)

• 8:30 US Philly Fed Manufacturing Index. Estimate 8.1 points
• 8:30 US Unemployment Claims. Estimate 265K
• 9:00 US HPI. Estimate 0.4%
• 10:00 US CB Leading Index. Estimate 0.4%
• 10:30 US Natural Gas Storage. Estimate 6B

*All release times are EDT

AUD/USD for Thursday, April 21, 2016

AUD/USD April 21 at 8:30 EDT

Open: 0.7800 Low: 0.7785 High: 0.7826 Close: 0.7814

AUD/USD Technical

• AUD/USD has shown limited movement in the Asian and European trade
• There is resistance at 0.7913
• 0.7796 remains fluid and is a weak support line
• Current range: 0.7796 to 0.7913

Further levels in both directions:

• Below: 0.7796, 0.7678, 0.7560 and 0.7472
• Above: 0.7913, 0.8054 and 0.8163

OANDA’s Open Positions Ratio

The AUD/USD ratio is unchanged on Thursday. Short positions have a majority of positions (44%), indicative of trader bias towards the pair reversing directions and losing 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.