AUD/USD – Aussie Holds Own Despite Soft Retail Sales, RBA Statement Next

The Australian dollar has edged higher on Thursday, continuing the lack of movement which marked the Wednesday session. AUD/USD is currently trading slightly above the 0.76 line. In economic news, Australian Retail Sales disappointed with a gain of 0.1%, short of the estimate. Later in the day, the RBA will release its monetary policy statement. In the US, today’s highlight is Unemployment Claims, with the indicator expected to remain steady at 265 thousand. On Friday, US employment numbers will be in the spotlight, with three key releases – Average Hourly Earnings, Nonfarm Employment Change and the Unemployment Rate. Traders should be prepared for possible volatility from AUD/USD following these important employment releases.

The Australian dollar remains at high levels, despite this week’s rate cut, which lowered rates from 1.75% to an all-time low of 1.50%. The currency also shrugged off a soft Retail Sales report on Thursday. This indicator is closely watched, as it is the primary gauge of consumer spending. In June, Retail Sales posted a negligible gain of 0.1%, shy of the forecast of 0.4% and a 4-month low. Consumer spending has been under pressure from weak wage growth as well as very low inflation. Will the RBA’s rate cut this week be enough to boost inflation levels? We’ll get a look at the RBA’s views of the economy later on Thursday, as the RBA releases its quarterly monetary policy statement. Many analysts expect further rate cuts in the near future, and any hints about additional easing from the bank could send the Australian dollar downwards.

US employment numbers for July started off in the right direction, as ADP Nonfarm Payrolls improved to 179 thousand, beating the estimate of 171 thousand. However, the ISM Non-Manufacturing PMI disappointed, as the index dipped to 55.5 points, missing the estimate of 56.0 points. On Thursday, we’ll get a look at Unemployment Claims, followed by the all-important Nonfarm Payrolls on Friday. Market sentiment has soured on the US dollar since last week’s GDP report, as the gain of 1.2% was well short of the forecast of a 2.6% gain.  The markets have circled September and December as the most likely dates for possible rate hikes. The Fed and the markets will be keeping a keen eye on wage growth and payroll reports on Friday, and if these numbers are sharp, the likelihood of a September rate hike will increase.

AUD/USD Fundamentals

Wednesday (August 3)

• 21:30 Australian Retail Sales. Estimate 0.3%. Actual 0.1%

Thursday (August 4)

• 7:30 US Challenger Job Cuts
• 8:30 US Unemployment Claims. Estimate 265K
• 10:00 US Factory Orders. Estimate -1.8%
• 10:30 US Natural Gas Storage. Estimate 3B
• 19:30 Australian AIG Construction Index
• 21:30 RBA Monetary Policy Statement

Upcoming Key Events

Friday (August 5)

• 8:30 US Average Hourly Earnings. Estimate 0.2%
• 8:30 US Non-Farm Employment Change. Estimate 180K
• 8:30 US Unemployment Rate. Estimate 4.8%

*Key releases are highlighted in bold

*All release times are EDT

AUD/USD for Thursday, August 4, 2016

AUD/USD August 4 at 3:40 EDT

Open: 0.7588 High: 0.7626 Low: 0.7587 Close: 0.7612

AUD/USD Technical

• AUD/USD posted small gains in the Asian session. The pair dropped lower in European trade but has recovered
• 0.7560 is providing support. It is a weak line
• There is resistance at 0.7701
• Current range: 0.7560 to 0.7701

Further levels in both directions:

• Below: 0.7560, 0.7440, 0.7339 and 0.7251
• Above: 0.7701, 0.7835 and 0.7938

OANDA’s Open Positions Ratio

AUD/USD ratio is showing little movement on Thursday, consistent with the lack of movement from AUD/USD. Long and short positions are close to an even split, indicating a lack of trader bias as to what direction AUD/USD 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.