AUD/USD – Aussie Continues Upward Push as Australian Business Confidence Improves

After sharp losses last week, the Australian dollar has rebounded, gaining over one cent this week against the US dollar. AUD/USD is trading in the mid-0.91 range in Tuesday’s European session. In economic news, Australian Business Confidence rose to zero points, ending a skid of two straight readings in negative territory. Chinese CPI, a key release, surprised the markets with a sharp increase. In the US, the NFIB Small Business Index fell well short of the estimate. The markets are keeping an eye on the Federal Reserve, which releases the minutes of its last policy meeting on Wednesday. 

There was some good news as Australian Business Confidence improved to zero points, its best showing since April. A reading above zero indicates optimism, so the business sector is not showing confidence in the economy just yet. Chinese CPI jumped from 2.1% to 2.7%, surpassing the estimate of 2.5%. Higher inflation in China will make Australian imports more expensive, so this release could weigh on the Aussie.

On Monday, the markets were treated to 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.

In the US, the 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. 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 Tuesday, July 9, 2013

Forex Rate Graph 21/1/13
 

AUD/USD July 9 at 12:30 GMT

AUD/USD 0.9172 H: 0.9198 L: 0.9084

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.9000 0.9071 0.9135 0.9221 0.9328 0.9405

 

AUD/USD has pushed higher, as the pair trades in the mid-0.91 range. The pair is facing resistance at 0.9221. This line could come under pressure if the Australian dollar continues to move higher. There is stronger resistance at 0.9328. On the downside, there is support at 0.9135, which is also a weak line. This is followed by 0.9071. The round number of 0.9000, which was in danger of falling only a few days ago, appears safe for the time being.

Current range: 0.9135 to 0.9221

Further levels in both directions:

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

 

OANDA’s Open Positions Ratio

AUD/USD ratio has shifted direction, and is indicating movement towards long positions. This is not reflective with what we are seeing from the pair, as the Aussie continues to post gains against the US dollar. The ratio continues to be dominated by long positions, indicating a strong bias towards 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 within striking distance of the 0.92 line. Will the upward trend continue? There are no major US releases on Tuesday, so it the pair might have a fairly quiet day.

 

AUD/USD Fundamentals

  • 1:30 Australian NAB Business Confidence. Actual 0 points.
  • 11:30 US NFIB Small Business Index. Estimate 96.2 points. Actual 93.5 points.
  • 14:00 US JOLTS Job Openings. Estimate 3.81M.

 

*Key releases are highlighted in bold

*All release times are GMT

 

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.