AUD/USD – Quiet Start to Trading Week

AUD/USD has been quiet since the middle of last week, and the pair has not shown much inclination to spring back into action. In Monday’s European session, AUD/USD is trading close to the 0.9250 line. In the US, last week ended with good news as UoM Consumer Sentiment climbed to multi-year levels. It’s a quiet schedule on Monday, with just one release on the calendar -US Pending Home Sales. There are no Australian releases on Monday.

US consumer confidence is very high, at least according to UoM Consumer Sentiment, which was released on Friday. The indicator rose from 84.1 to 85.1 points, its highest level since July 2007. US consumers are clearly feeling good about the economy, but will this translate into stronger spending and more jobs? The markets will have to wait for data from these and other sectors to see if a happier consumer is indeed leading to greater economic activity.

Another vital sector for economic growth is the US housing industry. Last week the US posted two housing releases which pointed in opposite directions.  Last week started off an a disappointing note as existing home sales fell to 5.08 million, way off the estimate of 5.27 million. However, New Home Sales showed strength, jumping from 476 thousand to 496 thousand, easily beating the estimate of 482 thousand. This was its best showing in five years. The markets will get another look at housing data on Monday, with the release of Pending Home Sales. The key indicator looked excellent last month, posting a gain of 6.7%. However, the markets are braced for a much weaker reading in July, with an estimate of a 1.1% decline.

Taking a look at Australia, the markets will get a look at the first major event of the week on Tuesday, with the release of Australian Building Approvals. This indicator is known for its sharp fluctuations, which makes accurate market predictions a tricky task. The estimate for July stands at 2.2%, and if the indicator does post a respectable gain, we could see the Aussie gain some ground. Also on Tuesday, RBA Governor Glenn Stevens will address a business forum in Sydney. Stevens recently discussed an RBA policy meeting, and the currency markets moved as a result. So a speech by the governor should be treated by traders as a potential market-mover.

 

AUD/USD for Monday, July 29, 2013

Forex Rate Graph 21/1/13
 

AUD/USD July 29 at 11:50 GMT

AUD/USD 0.9244 H: 0.9287 L: 0.9233

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.9072 0.9135 0.9221 0.9328 0.9405 0.9541

 

AUD/USD is trading quietly on Monday, as the proximate support and resistance levels (S1 and R1 above) remain in place. The pair continues to receive support at 0.9221. This is a weak line, and could be tested if the US dollar shows some improvement. This is followed by stronger support at 0.9135. On the upside, the pair faces resistance at 0.9328. This is followed by 0.9405, which has remained intact since mid-June.

  • Current range: 0.9221 to 0.9328

 

Further levels in both directions:

  • Below: 0.9221, 0.9135, 0.9072, 0.9000, 0.8916 and 0.8747
  • Above: 0.9328, 0.9405, 0.9541 and 0.9657

 

OANDA’s Open Positions Ratio

AUD/USD ratio has started off the week almost unchanged.  This is reflected in what we are seeing from the pair, with AUD/USD showing very little movement on Monday. The ratio continues to have a substantial majority of long positions, pointing to trader bias in favor of the Australian dollar moving upwards.

The Aussie was busy in the middle of last week, but has since settled down. We could see the pair show some activity later in the day, as the US releases key housing numbers. As well, Australia will release Building Approvals early Tuesday, and this event is often a market-mover.

 

AUD/USD Fundamentals

14:00 US Pending Home Sales. Estimate -1.1%

 

*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.