AUD/USD – Aussie Jumps After Strong GDP

The Australian dollar continues to climb higher on Wednesday. In the European session, AUD/USD is trading in the mid-0.91 range. The Australian dollar received a boost from another solid GDP release on Wednesday. Over in the US, today’s key release is Trade Balance. The markets are expecting a wider trade deficit in August.

The Aussie has enjoyed an excellent week so far. The currency has now gained over two cents against its US counterpart. The rally continued as Australian GDP posted a gain of 0.6% in Q2, matching the forecast. GDP has risen 0.6% in four of the past five quarters, indicative of respectable growth by economy. AUD/USD responded positively to the news, and has jumped over one cent in Wednesday trading. Meanwhile, the RBA held the benchmark interest rate at 2.50%. The RBA refrained from discussing possible rate cuts, which likely would have spooked investors and hurt the Aussie. The Australian central bank has made no secret of the fact that it would like the Australian dollar to fall further, but is unlikely to reduce rates as long as the currency does not rise sharply.

The US released its first major event of the week on Tuesday. ISM Manufacturing PMI did not disappoint, climbing to its highest level since May 2011. The index rose to 55.7 points in August, beating the estimate of 54.2. Predictably, the strong figure has increased talk about QE tapering in September. With the Federal Reserve not letting on when it might start tapering QE, the markets are hungry for any news which could affect the timing of QE tapering. US releases, especially employment data, will continue to be scrutinized under the market microscope.

A US military strike against Syria is on hold, but tensions in the Middle East remain high. A military operation had seemed imminent last week, but President Obama announced on the weekend that he will seek Congressional approval before taking any action against Syria. With Congress in recess until September 9th, a military strike could be delayed until mid-September or even later. Russia has warned the US not to take any unilateral action against Syria, so we can expect the volatile situation to continue, bringing with it market volatility.

AUD/USD for Wednesday, September 4, 2013

AUD/USD September 4 at 11:55 GMT

AUD/USD 0.9169 H: 0.9168 L: 0.9038

AUD/USD Technical

• AUD/USD continues to rally in Wednesday trading. The pair pushed above the 0.91 line late in the Asian session and has posted gains in European trading.
• The pair is facing resistance at 0.9221. This is followed by stronger resistance at 0.9328. This line has remained in place since late June.
• On the downside, the pair is receiving support at 0.9135.  This is not a strong line and could face pressure if the Aussie retracts. This is followed by support at 0.9089.
• Current range: 0.9135 to 0.9221

Further levels in both directions:

• Below: 0.9135, 0.9089, 0.9000, 0.8926, 0.8848 and 0.8747
• Above: 0.9221, 0.9328, 0.9400 and 0.9508

OANDA’s Open Positions Ratio

AUD/USD ratio continues to point to movement towards short positions. This is not reflected in the pair’s current movement, as the Australian dollar has posted sharp gains against the greenback. This can be explained by the fact that the Aussie’s strong gains have led to the covering of numerous long positions, resulting in a greater percentage of open short positions in the ratio. We can expect this movement to continue if AUD/USD keeps moving upwards.

The Australian dollar has looked sharp, gaining over two cents so far this week. Will the upward trend continue? The US releases Trade Balance later today and this key release could affect the movement of AUD/USD.

AUD/USD Fundamentals

• 1:30 Australian GDP. Estimate 0.6%. Actual 0.6%.
• 11:30 US Challenger Job Cuts.
• 12:30 US Trade Balance. Estimate -38.7B.
• 14:00 US IBD/TIPP Economic Optimism. Estimate 46.2 points.
• All Day – US Total Vehicle Sales. Estimate 15.8B.
• 18:00 US Beige Book.

*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.