AUD/USD – Aussie Edges Higher, Australian Building Permits Next

AUD/USD has posted small gains on Monday. In the North American session, the pair is trading at 0.7570. On the release front, Australian HIA Home Sales recorded a sharp decline of 9.7%.  In the US, Personal Spending gained 0.3%, while Personal Income rose 0.4%, as both indicators matched the forecast. Later in the day, Australian Building Approvals will be released. The indicator is expected to rebound to 1.2%. On Tuesday, the US will release CB Consumer Confidence, a key indicator.

Australian construction numbers continue to show softness. Australian HIA Home Sales plunged 9.7% in July, more than offsetting a gain of 8.2% a month earlier. Last week, Construction Work Done came in at -3.7% in the second quarter, compared to an estimate of -1.9%. The indicator has managed just one gain in the past nine quarters, pointing to ongoing weakness in the construction industry. This soft reading could have a negative impact on second quarter GDP, which will be released on September 6. The economy will be hard-pressed to replicate first-quarter growth, which recorded an impressive gain of 1.1 percent.

Central bankers gathered at Jackson Hole late last week, and the highlight of the economic summit was a speech from Janet Yellen on Friday. The Fed chair was crystal clear in her remarks, saying the case for a rate increase had “strengthened in recent months”. Yellen noted that the economy was close to maximum employment, inflation was steady, and consumer spending remained solid. At the same time, Yellen did not provide any timeline on a rate hike nor did she spell out what the Fed wants to see before pressing the rate trigger. On Friday, Fed members Dennis Lockhart and Stanley Fischer both came out in favor of two rate hikes in 2016. Although the Fed has revived the possibility of a September hike, a December move is considered much more likely, with odds as high as 65% according to Goldman Sachs. However, given that any move by the Fed will be data-dependent, plenty can still happen before the Fed holds its policy meeting on September 21.

AUD/USD Fundamentals

Sunday (August 28)

  • 21:00 Australian HIA New Home Sales. Actual -9.7%

Monday (August 29)

  • 8:30 US Core PCE Price Index. Estimate 0.1%. Actual 0.1%
  • 8:30 US Personal Spending. Estimate 0.3%. Actual 0.3%
  • 8:30 US Personal Income. Estimate 0.4%. Actual 0.4%
  • 21:30 Australian Building Approvals. Estimate 1.2%

Tuesday (August 30)

  • 10:00 US CB Consumer Confidence. Estimate 97.2

*All release times are EDT

* Key events are in bold

AUD/USD for Monday, August 29, 2016

AUD/USD August 29 at 11:20 EDT

Open: 0.7540 High: 0.7570 Low: 0.7524 Close: 0.7571

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.7339 0.7440 0.7560 0.7701 0.7835 0.7938
  • AUD/USD showed limited movement in the Asian and European sessions. The pair has posted slight gains in North American trade
  • 0.7701 is a strong resistance line
  • 0.7560 was tested in support earlier and is weak line
  • Current range: 0.7560 to 0.7701

Further levels in both directions:

  • Below: 0.7560, 0.7440, 0.7339 and 0.7200
  • Above: 0.7701, 0.7835 and 0.7938

OANDA’s Open Positions Ratio

AUD/USD ratio is showing long positions with a slight majority (54%), indicative of slight trader towards AUD/USD continuing to post gains.

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.