AUD/USD – Quiet Start to Week for Aussie

The Australian dollar is steady at the start of the new trading week, as AUD/USD trades quietly in the low-0.89 range on Monday. The Aussie looked very sharp last week, jumping over 200 points against the US dollar. On Friday, US Nonfarm Employment Change looked weak but the Unemployment Rate dipped lower. There are no Australian or US releases on Monday. We’ll get a look at NAB Business Confidence, a key release, early on Tuesday.

On Friday, the markets were treated to another dismal Nonfarm Payrolls release. The key employment indicator improved to 113 thousand, but this was well of the estimate of 185 thousand. The fact that the Aussie was unable to post gains against the dollar on Friday point to the high regard the markets have for the strength of the US economy. There was some good news as well on the US employment front, as the Unemployment Rate dipped to 6.6%, its lowest level in over five years.

The Australian dollar climbed more than 200 points last week against the US dollar, fuelled by the RBA Rate Statement and strong Australian releases. Retail Sales posted a gain of 0.5%, matching the forecast. Trade Balance surprised with its first surplus since July, posting a reading of $+0.47 billion. This easily beat the estimate of $-0.27 billion. There was excellent news from NAB Quarterly Business Confidence, which jumped to 8 points in Q4, its highest level in almost three years. This was an impressive leap from the Q3 reading of 3 points.

Last week, the Reserve Bank of Australia maintained the benchmark interest rate at 2.50%, where it has been pegged since August. This didn’t grab much attention from the markets, but the Rate Statement did and the Aussie shot higher in response. Governor Glenn Stevens noted that interest rates are at an appropriate level, indicating a shift in stance from easing to neutral. He also made a point of noting the Australian dollar’s recent slide, stating that the lower value of the currency will “assist in achieving balanced growth” for the Australian economy. Importantly, Stevens refrained from saying that the Australian dollar was “uncomfortably high” as he has done in the past. The RBA has room to be pleased, as the Aussie has shed 8% of its value in the past three months. However, if the Aussie rebounds and rises into the low-90s, we could see the RBA again attempt to “talk down” the currency.

AUD/USD for Monday, February 10, 2014

AUD/USD February 10 at 15:15 GMT

AUD/USD 0.8936 H: 0.8959 L: 0.8907

AUD/USD Technical

• AUD/USD is showing little movement in Monday trading. The pair dipped to a low of 0.8907 late in the Asian session.
• 0.8893 continues to provide support. It is not a strong line and could face pressure if the Aussie loses ground. This is followed by support at 0.8735.
• On the upside, the key level of 0.9000 is the next line of resistance. It is followed by resistance at 0.9119.
• Current range: 0.8893 to 0.9000

Further levels in both directions:

• Below: 0.8893, 0.8735, 0.8658, 0.8505 and 0.8425
• Above: 0.9000, 0.9119, 0.9229 and 0.9361

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in long positions in Monday trading. This is not consistent with what we are seeing from the pair, as the pair is showing very little movement on Monday. AUD/USD ratio is made up of a substantial majority of long positions, reflecting a trader bias towards the Aussie resuming its upward move against the greenback.

The Australian dollar is showing little activity on Monday. With no releases out of Australia or the US on Monday, it could be an uneventful North American session.

AUD/USD Fundamentals

• There are no releases out of Australia or the US on Monday.

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.