AUD/USD – Aussie Slide Continues Despite Weak US Unemployment Claims

AUD/USD continues to lose ground in Thursday trading. Early in the North American session, the pair has slipped below the 0.96 line. European session. In the US , Unemployment Claims was a disappointment, coming in above the estimate. The trade deficit narrowed in September and New Home Sales will be released later today. In Australia, RBA Deputy Governor Philip Lowe spoke at a financial forum in Melbourne.

Australian CPI, one of the most important economic indicators, looked solid in September. The index climbed 1.2%, compared to 0.4% gains in the previous two months. This surpassed the estimate of 0.8%. CPI hit a four-month high, but surprisingly, the Aussie failed to take advantage of the strong release and fell against the US dollar. Most anlaysts feel that the RBA will not reduce interest rates before the end of the year. The unexpectedly strong CPI reading lends support to this view.

Another US employment release, another disappointing result. Unemployment Claims dropped last week, falling from 358 thouand to 350 thousand. However, the markets were disappointed, having anticipated a result of 343 thousand. This release comes on the heels of a dismal Non-Farm Payrolls report, and does not bode well for the US dollar, which is finding itself under pressure from the major currencies.

There was some optimism and relief last week, as the Republicans and Democrats finally reached an agreement last week to reopen the government and raise the debt ceiling, following weeks of fighting in Congress. However, the deal provides short-term relief only – the government will be funded until January 15, while the debt limit will be raised until February 7. Both sides have agreed to discuss budget issues and try to reach a long-term agreement before December 13. So we could be right back where we started in just a few months. At the same time, the public is angry at lawmakers for creating the crisis, and with congressional elections only a year away, the politicians on Capitol Hill may think twice before plunging the country into another fiscal and political crisis.

The US government is again functioning and a default has been averted, but the agreement hammered out in Congress last week provides short-term relief only, as it raises the debt ceiling until early February and funds the government until mid-January. The underlying budgetary issues remain unresolved, consumer confidence has been shaken and employment numbers are not looking good, as underscored by this week’s Non-Farm Payrolls and Unemployment Claims. Given this situation, the Fed is unlikely to push the taper trigger until early 2014, perhaps as late as March or April.

AUD/USD for Thursday, October 24, 2013

AUD/USD October 24 at 13:30 GMT

AUD/USD 0.9598 H: 0.9671 L: 0.9579

AUD/USD Technical

• AUD/USD continues to lose ground in Thursday trading. The pair broke through the 0.96 line late in the European session and remains under pressure.
• The pair is facing resistance at 0.9613. This weak line could be tested if the Australian dollar reverses direction. This is followed by a resistance line at the round number of 0.9700.
• On the downside, the pair is receiving strong support at 0.9508. This is followed by an important support line at 0.9400.
• Current range: 0.9508 to 0.9613

Further levels in both directions:

• Below: 0.9508, 0.9400, 0.9305 and 0.9229
• Above: 0.9613, 0.9700, 0.9821, 0.9900 and 1.00

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to movement towards long positions in Thursday trading, continuing a trend we have seen for most of this week. This is not reflected in the pair’s current movement, as the Australian dollar continues to lose ground. A majority of the open positions in the AUD/USD ratio are long, reflecting a trader bias towards the Aussie reversing direction and moving higher.

The Australian dollar continues to lose ground against the US currency. With the US releasing key housing data later in the day, the pair could continue to be busy during the North American session.

AUD/USD Fundamentals

• 00:30 Reserve Bank of Australia Deputy Governor Philip Lowe Speaks.
• 12:30 US Trade Balance. Estimate -39.4B. Actual -38.8B.
• 12:30 US Unemployment Claims. Estimate 343K. Actual 350K.
• 13:00 US Flash Manufacturing PMI. Estimate 52.8 points. Actual 51.1 points.
• 14:00 US New Home Sales. Estimate 427K.
• 14:00 US JOLTS Job Openings. Estimate 3.77M.
• 14:30 US Natural Gas Storage. Estimate 80B.

*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.