AUD/USD – Aussie Slightly Higher After Solid Building Approvals

AUD/USD has posted gains in Thursday trading, as the pair trades just above the 0.95 line in the European session. The Aussie got a boost as Australian Buildings Approvals jumped 14.4%, a sixteen-month high. Over in the US, Unemployment Claims dropped last week and were within market expectations. On Wednesday, the Federal Reserve released a statement that it would maintain QE at current levels, given the performance of the US economy.

US Unemployment Claims looked solid on Thursday, ending a nasty string of weak employment releases. Unemployment Claims dropped from 350 to 340 thousand, edging below the estimate of 341 thousand. The recent government shutdown had pushed up claims in recent weeks as laid-off workers applied for benefits, but unemployment claims have been dropping since the reopening of the government in October. On Wednesday, ADP Non-Farm Payrolls dropped to 130 thousand in September, compared to 166 thousand the month before. This was well off the estimate of 151 thousand. It was the indicator’s lowest level showing six months and underscores that the US labor market is struggling to create new jobs.

The Federal Reserve wrapped up its policy meeting on Wednesday, the first meeting since Congress reached an agreement on the debt ceiling and the shutdown. As expected, the Fed said that it would maintain QE at current levels of $85 billion each month. However, the Fed’s policy statement was less dovish than expected, as the Fed noted that the economy was expanding “at a moderate pace” and left the door open for QE tapering in December. However, the prevailing view in the markets is that short of a sharp turnaround in US numbers, QE tapering will be on hold until early 2014.

Earlier in the week, RBA Governor Glenn Stevens shook up the markets with some negative comments about the Australian dollar. Stevens stated that the currency’s high level was not supported by the costs and productivity in the economy, and urged investors to tread carefully in the foreign exchange market. The RBA wants to see a lower Australian dollar, in order to boost the manufacturing and export sectors, which are struggling. The Bank is reluctant to lower interest rates right now, so it appears that Stevens is trying to “talk down” the currency. If the Australian dollar continues to trade at high levels, we can expect similar types of statements from the RBA.

AUD/USD for Thursday, October 31, 2013

AUD/USD October 31 at 13:15 GMT

AUD/USD 0.9505 H: 0.9526 L: 0.9466

AUD/USD Technical

• AUD/USD has posted gains in Thursday trading. The pair crossed above the 0.95 line early in the European session.
• The pair is testing resistance at 0.9508. This is a weak line which could be tested in the North American session. This is followed by a strong resistance line at 0.9613.
• On the downside, the pair is receiving support at the round number of 0.9400. This is followed by support at 0.9305, which has remained in place since early October.
• Current range: 0.9400 to 0.9508

Further levels in both directions:

• Below: 0.9400, 0.9305, 0.9229 and 0.9119
• Above: 0.9508, 0.9613, 0.9700, 0.9821 and 0.9900

OANDA’s Open Positions Ratio

AUD/USD ratio is unchanged in Thursday trading. This is not reflected in the pair’s current movement, as the Australian dollar has posted gains against the US dollar. A majority of the open positions in the AUD/USD ratio are long, reflecting a trader bias towards the Aussie continuing to move higher.

The Australian dollar has posted modest gains on Thursday, but remains under pressure as it tries to stay above the 0.95 line. We can expect movement during the North American session to be limited, as there are no further major releases on Thursday.

AUD/USD Fundamentals

• 00:30 Australian Building Approvals. Exp. 2.9%. Actual 14.4%.
• 00:30 Australian Import Prices. Exp. 3.5%. Actual 6.1%.
• 00:30 Australian Private Sector Credit. Exp. 0.4%. Actual 0.3%.
• 12:30 US Unemployment Claims. Exp. 341K. Actual 340K.
• 13:00 US Treasury Secretary Jack Lew Speaks.
• 13:45 US Chicago PMI. Exp. 55.1 points.
• 14:30 US Natural Gas Storage. Exp. 35B.

*Key releases are highlighted in bold

*All release times are GMT

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