AUD/USD – Aussie Losses Continue, Testing 0.93 Level

AUD/USD continues to lose ground in Friday trading. In the European session, the pair was trading just above the 0.93 line. In economic news, today’s US highlight is Revised UoM Consumer Sentiment. The markets are bracing for a weak release in August. There are no Australian releases on Friday.

After an impressive rally earlier this month, which saw AUD/USD improve by almost six cents, the Aussie has run into some turbulence. The currency has coughed up close to two cents in little over a week, and is struggling to remain above the 0.93 line. The RBA is carefully monitoring interest rates, and could reduce them further in order to help the economy. As well, the RBA has stated more than once that it does not view a strong Australian dollar as positive for the economy. These sentiments from the RBA are likely to continue to weigh on the Australian currency.

In the US, Thursday’s numbers were a mix. Unemployment Claims improved slightly last week, from 309 thousand to 305 thousand last week. This beat the estimate of 319 thousand. The news was nowhere as positive from in the US housing sector, as Pending Home Sales declined by 1.6%, well off the estimate of -0.9%. This was the sharpest gain we’ve seen from the housing indicator this year. Revised UoM Consumer Sentiment will wrap up the week. The markets are braced for a reading below the 80-point level, which has not happened since March. Will the indicator surprise the markets with a strong reading?

The markets were counting on a QE tapering in September, but this was not to be as the Federal Reserve didn’t make a move. The Fed was of the opinion that US economic data, particularly employment numbers, did not justify scaling down QE at this time. So with all the speculation about QE taper behind us, what can we expect from the Federal Reserve? After the FOMC Statement, Federal Reserve Bank of St. Louis President James Bullard shed some light on the dramatic move (or lack of) by the Federal Reserve. Bullard said the vote was close, but weaker US numbers led to a decision not to taper. He added that the Fed may go ahead with “small” reductions to QE at its next policy meeting in October.

AUD/USD for Friday, September 27, 2013

AUD/USD 0.9310 H: 0.9275 L: 0.9298

AUD/USD Technical

• AUD/USD continues to lose ground in Friday trading. The pair has been testing the 0.93 line in the European session.
• The pair is facing weak resistance at 0.9328. This line could fall if AUD/USD reverses its downward direction. This is followed by stronger resistance at 0.9400.
• On the downside, the pair is receiving strong support at 0.9221. Next, there is a support level at 0.9135.
• Current range: 0.9221 to 0.9328

Further levels in both directions:

• Below: 0.9221, 0.9135, 0.9089 and 0.9000
• Above: 0.9328, 0.9400, 0.9508, 0.9613 and 0.9700

OANDA’s Open Positions Ratio

AUD/USD ratio continues to be made up of a strong majority of long positions. This is indicative of strong trader sentiment towards the Aussie reversing direction and moving higher against the US dollar.

After excellent gains this month, the AUD/USD rally has hit a wall this week. Will the downward trend continue? With the US releasing important consumer data later today, we could see some activity from the pair in the North American session.

AUD/USD Fundamentals

• 1:15 US FOMC Member Esther George speaks at economic forum in Denver. George is considered hawkish in stance.
• 9:45 US FOMC Member Charles Evans speaks at a bank conference in Oslo, Norway. Evans is considered dovish in stance.
• 12:30 US Core PCE Price Index. Estimate 0.1%.
• 12:30 US FOMC Member Eric Rosengren speaks at a financial conference in New York. Rosengren is considered dovish in stance.
• 12:30 US Personal Spending. Estimate 0.3%.
• 12:30 US Personal Income. Estimate 0.5%.
• 13:55 Revised UoM Consumer Sentiment. Estimate 78.2 points.
• 13:55 Revised UoM Inflation Expectations.
• 14:55 US FOMC Member Charles Evans speaks at a bank conference in Oslo, Norway. Evans is considered dovish in stance.
• 18:00 US FOMC Member Dudley speaks at an event in Syracuse. Dudley is considered neutral in stance.

*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.