AUD/USD – Aussie Moves Higher Despite Weak Australian Employment Release

The Australian dollar has posted modest gains in the Monday session, as it trades close to the 0.91 line in European trading. The Aussie did lose some ground earlier in the day following a weak ANZ Job Advertisements release, but has managed to bounce higher. In the US, it’s a quiet start to the week with just one minor release on the schedule.

The Australian dollar continues to trade close to multi-year lows, and is trying to shrug off a disappointing domestic employment release. ANZ Job Advertisements, which provides a snapshot of the labor picture, continues to flounder, posting a decline of -1.6%. This is the fifth decline out of six releases this year, and points to a weak Australian economy that is having trouble creating jobs. The markets will get another look at employment numbers on Thursday, as Australia releases Employment Change and the Unemployment Rate. If these numbers fail to impress the markets, we could see the Aussie drop some more. 

The Australian dollar has looked brutal, shedding 10% of its value since April. The currency has been crowned with the dubious title of the worst-performing major currency over the past three months. Will the Aussie continue to drop? The major banks seem to think so. Credit Suisse, for example, predicts that the currency will drop to 87 US cents by October, and will hit 75 cents within a year. If the Aussie doesn’t cooperate on its own and head south, the RBA, which continues to declare that the currency is overvalued, could step in and lower interest rates, and push the currency to lower levels.

Meanwhile, The US employment picture has brightened, and the dollar got a boost on Friday, thanks to a solid Non-Farm Payrolls release. The key indicator hit a four-month high, posting 200 thousand new jobs. This was well above the estimate of 163 thousand. Earlier in the week, Unemployment Claims came in just below the estimate. The unemployment rate was unchanged at 7.6%. There are two factors which have contributed to the dollar’s broad strength. First, last week’s strong employment data points to an improving US economy. Second, there is increased likelihood that the Federal Reserve could taper QE, which would be a dollar-positive event. 

AUD/USD for Monday, July 8, 2013

AUD/USD July 8 at 12:30 GMT

AUD/USD 0.9097 H: 0.9099 L: 0.9042

AUD/USD Technical

AUD/USD has edged higher on Monday and is testing the 0.91 line. The pair is facing weak resistance at 0.9135. This line could face more pressure if the Australian dollar can post further gains. There is stronger resistance at 0.9221. On the downside, there is support at 0.9071, which is also a weak line. This is followed by the psychologically significant 0.90 line, which has held firm since September 2010.

Current range: 0.9071 to 0.9135 

Further levels in both directions:

• Below: 0.9071, 0.9000, 0.8916 and 0.8747
• Above: 0.9135, 0.9221, 0.9328, 0.9405, 0.9541 and 0.9651

OANDA’s Open Positions Ratio

AUD/USD ratio is starting the week with some movement towards long positions. This is in line with what we are seeing from the pair, as the Aussie has posted gains against the US dollar. The ratio continues to be dominated by long positions, indicating a strong bias to AUD/USD continuing to recover and move upwards.

The Australian dollar took a hit from the broadly stronger US currency late last week, and fell close to the significant 0.90 level. However, the Aussie has reversed direction this week and is trading close the 0.91 level. Will the upward trend continue? The Aussie is sensitive to Chinese data, and the Asian giant will release CPI data early Tuesday, so we could see some volatility from the pair after this release.

AUD/USD Fundamentals

• 1:30 Australian ANZ Job Advertisements. Actual -1.8%. 
• 19:00 US Consumer Credit. Estimate 13.2B.

*Key releases are highlighted in bold

*All release times are GMT

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