AUD/USD – Aussie Posts Gains As Chinese Mfg. PMI Improves

The Australian dollar is stronger as we start the new trading week. The pair has risen to the mid-0.94 range early in the North American session on Monday. In economic news, there is just one US economic release today – Flash Manufacturing PMI. There are no Australian releases on Monday.

AUD/USD was up sharply last week, following the surprise announcement on Wednesday by the Federal Reserve not to taper its bond-buying program. Most analysts had expected the Fed to announce a scaling down of the present bond-buying program of $85 billion/month by as much as $15 billion each month. However, the Fed decided to stay the QE course for now, stating that US economic data was not strong enough to warrant QE tapering at this time. The Fed also downgraded its forecast for the economy, estimating GDP growth for 2013 at 2.0-2.3%, down from 2.3-2.6% in an earlier forecast. It also lowered its outlook for 2014 from 2.9-3.1%, down from 3.0-3.5%. The Aussie took full advantage of the Fed announcement, gaining about 150 points against its US counterpart.

Overshadowed by the FOMC Statement were some excellent US releases on Thursday. Unemployment Claims came in at 309 thousand, well below the estimate of 331 thousand. Existing Home Sales rose to 5.48 million, crushing the estimate of 5.27 million and posting its best level in over three years. The Philly Fed Manufacturing Index rocketed from 9.3 to 22.3 points, its best showing since May 2011. Perhaps if we’d seen this kinds of numbers a week or two ago, the Fed might have introduced QE tapering. The strong numbers helped the US dollar recover some of its mid-week losses against the Aussie.

The Australian dollar started off the week on a positive note after strong Chinese Flash Manufacturing PMI release. The key index continues to point to expansion, improving from 50.1 points in July to 51.2 points in August. This beat the estimate of 50.9 points. Key Chinese releases, such as Manufacturing PMI, can have a major impact on the Australian dollar, since China is Australia’s number one trading partner.

AUD/USD for Monday, September 23, 2013

AUD/USD 0.9432 H: 0.9447 L: 0.9383

AUD/USD Technical

• AUD/USD has posted gains in Monday trading, touching a high of 0.9447 in the European session.
• The pair continues to face resistance at 0.9508. This is followed by a strong line at 0.9613.
• On the downside, the pair is receiving weak support at the round number of 0.9400. This line could face strong pressure if the US dollar gains ground. This is followed by stronger support at 0.9328.
• Current range: 0.9400 to 0.9508

Further levels in both directions:

• Below: 0.9400, 0.9328, 0.9221, 0.9135 and 0.9089
• Above: 0.9508, 0.9613, 0.9700 and 0.9821

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to movement towards long positions in Monday trading. This is reflective of what we are currently seeing from the pair, as the Australian dollar has posted modest gains. Long positions retain a sizeable majority, indicative of strong trader sentiment towards the Aussie continuing to move higher.

AUD/USD has pulled away from the 0.94 line as we begin the new week. With no major releases out of Australia or the US on Monday, we could see an uneventful North American session from the pair.

AUD/USD Fundamentals

• 13:00 US Flash Manufacturing PMI. Estimate 54.2 points.
• 13:30 US FOMC Member William Dudley Speaks.

*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.