The Australian dollar’s downward move is continuing on Friday. In the European session, AUD/USD is trading just below the 0.96 line. In economic news, US Unemployment Claims came in higher than the estimate on Thursday. Today’s key release is US Core Durable Goods Orders, and the markets will also be keeping an eye on UoM Consumer Sentiment. There are no Australian releases on Friday, but Chinese Flash Manufacturing PMI lost ground in September, although it did beat the market estimate. The Aussie is sensitive to key Chinese data, so a weaker Chinese PMI has contributed to the Australian dollar’s slide.
It’s been a rough week for US employment releases. On Thursday, Unemployment Claims came in at 350 thousand, above the estimate of 343 thousand. This weak figure came on the heels of Non-Farm Payrolls, which slipped to a six-month low. The US unemployment rate dipped to 7.2%, a five-year low, but this does not point to increased employment, as the participation rate remained at 63.8%, its lowest level since 1978. These figures indicate that the US labor market continues to have difficulty creating new jobs. The weak readings are putting pressure on the US dollar, which finds itself at two-year lows against the euro.
There was some optimism and relief in the markets 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. The bottom line? The US could face a repeat of the shutdown and debt crisis started in just a few months. At the same time, the public is angry at lawmakers for allowing the budget deadlock to drag on for weeks, and with congressional elections only a year away, politicians on Capitol Hill should 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. Given this situation, the Fed is unlikely to push the taper trigger until early 2014, perhaps not before March or April.
AUD/USD for Friday, October 25, 2013
AUD/USD October 25 at 11:50 GMT
AUD/USD 0.9590 H: 0.9624 L: 0.9584
- AUD/USD continues to lose ground in Friday trading, the third straight day of this downward trend.
- The pair continues to face resistance at 0.9613. This weak line could be tested if the Aussie can reverse directions. This is followed by strong 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 has reversed directions on Friday, and is showing movement towards long positions. This is reflected in the pair’s current movement, as the Australian dollar continues to lose ground against the US dollar. 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 manufacturing data later in the day, we could see some volatility from the pair if the reading is not in line with market expectations.
- 12:30 US Core Durable Goods Orders. Estimate 0.6%.
- 12:30 US Durable Goods Orders. Estimate 1.7%.
- 13:55 US Revised UoM Consumer Sentiment. Estimate 75.8 points.
- 13:55 US Revised UoM Inflation Expectations.
- 14:00 US Wholesale Inventories. Estimate 0.3%.
*Key releases are highlighted in bold
*All release times are GMT
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