AUD/USD – Under Pressure as Markets Eye Aussie Business Confidence

AUD/USD has edged lower on Monday, as the pair trades in the mid-0.93 range late in the European session. Australian events started off the week on a promising note as ANZ Job Advertisements posted a solid gain of 1.5%. The markets are keeping a close eye on NAB Business Confidence, which will be released early on Tuesday. In the US, it’s a quiet start to the week, with no major releases on Monday.

US employment data continues to be a concern, as the eagerly-anticipated Nonfarm Employment Change crashed to just 142 thousand on Friday, its lowest gain since January. The markets had expected a gain of 226 thousand. This follows a weak ADP Nonfarm Payrolls report as well as a rise in unemployment claims. There was better news from the services sector, as the ISM Non-Manufacturing PMI continued its impressive climb, hitting 59.6 points in August, well above the estimate of 57.3. This reading follows the ISM Manufacturing PMI, which climbed to 59.0 points. The impressive readings from the manufacturing and services sectors point to a balanced economic recovery. If US numbers continue to improve, we could see an interest rate hike in the early part of 2015.

The Australian dollar is sensitive to key Chinese releases, as China is Australia’s biggest trading partner. Chinese trade surplus hit a record high in August, climbing to $49.8 billion, easily beating the estimate of $40.8 billion. Stronger Chinese exports should translate into increased demand for Australian raw materials, which bodes well for the Australian export sector and the Aussie. We’ll get a look at additional key Chinese numbers during the week, with the release of CPI and Industrial Production. The Australian dollar could gain ground if these releases beat expectations.

As expected, the RBA held rates at 2.50% last week, and RBA Governor Glenn Stevens reiterated that the central bank had no plans to adjust interest rates for the time being. The RBA has now kept the benchmark rate at a historic low of 2.5 per cent for 13 months. The central bank finds itself with little wiggle room – it is reluctant to raise rates as the economy remains fragile, but is also unwilling to cut rates and risk heating up the housing market. The RBA also took a swipe at the high value of the Australian dollar, saying that it was weighing on efforts to increase economic growth.

AUD/USD for Monday, September 8, 2014

AUD/USD September 8 at 13:35 GMT

AUD/USD 0.9327 H: 0.9374 L: 0.9324

AUD/USD Technical

• AUD/USD had an uneventful Asian session. The pair has lost ground in the European session.
• 0.9229 is providing strong support.
• 0.9361 is an immediate resistance line. 0.9446 is stronger.
• Current range: 0.9361 to 0.9446

Further levels in both directions:

• Below: 0.9229, 0.9119, 0.9020 and 0.8953
• Above: 0.9361, 0.9446, 0.9617 and 0.9757

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in short positions on Monday, continuing the trend we saw on Friday. This is consistent with the pair’s movement, as the Aussie has posted losses to start off the week. The ratio is almost evenly split between open long and short positions, indicative of a lack of trader bias as to what direction the pair will take.

AUD/USD Fundamentals

• 1:30 Australian ANZ Job Advertisements. Actual 1.5%.
• 12:45 US Treasury Secretary Jack Lew Speaks.
• 19:00 US Consumer Credit. Estimate 17.4B.

* Key releases are highlighted in bold

*All release times are GMT

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