AUD/USD – Aussie Under Pressure as GDP Slips

AUD/USD remains under pressure on Wednesday, as the pair struggles to stay above the 0.84 line. The Aussie remains in a sharp downward trend, having lost about 350 points in the past two weeks. On the release front, Australian GDP slipped to 0.3% in Q3, missing expectations. In the US, ADP Nonfarm Employment Change slipped to 208 thousand, well off expectations. ISM Non-Manufacturing PMI looked sharp in November, improving to 59.3 points.

Australian GDP was a disappointment, as the key indicator fell to 0.3% in Q3, the weakest quarterly gain in over three years. The markets had expected a gain of 0.7%. Earlier in the week, there were no surprises from the RBA, which held interest rates at 2.50%, a record low. RBA Governor Glenn Stevens reiterated that the central bank plans to keep rates at ultra-low levels for the near future. The RBA has been reluctant to tinker with rate levels, which have remained steady since August 2013. There was some good news from Building Approvals, which jumped 11.4% in October, crushing the estimate of 5.2%. This was the indicator’s strongest showing since September 2013.

US jobless claims did not impress, as ADP Nonfarm Employment Change fell to 208 thousand, down from 230 thousand in the previous release. This was well short of the estimate of 223 thousand. We’ll get a look at the official Nonfarm Employment Change report on Friday, with the markets expecting a strong reading of 231 thousand. Will the indicator meet or  beat expectations?

The US manufacturing sector continues to expand, as ISM Manufacturing PMI remained strong in November. The index came in at 58.7 points, close to the previous release of 59.0 points, which marked a three-year high. The positive US manufacturing data stands in sharp contrast to the situation in the Eurozone and China. In the Eurozone, manufacturing PMIs in France, Germany and Italy contracted in November. In China, the world’s second largest economy, Manufacturing PMI edged down to 50.3 points, down from the previous reading of 50.8 points.

AUD/USD for Wednesday, December 3, 2014

AUD/USD December 3 at 15:00 GMT

AUD/USD 0.8408 L: 0.8466 H: 0.8389

AUD/USD Technical

• AUD/USD posted losses in the Asian session. The pair then reversed directions and edged higher in European trade. AUD/USD is unchanged in the North American session.
• 0.8456 continues to see activity and is a weak resistance line. 0.8550 is stronger.
• 0.8315 is a strong support level.
• Current range: 0.8315 to 0.8456.

Further levels in both directions:

• Below: 0.8315, 0.8240, 0.8150 and 0.8081
• Above: 0.8456, 0.8550, 0.8668, 0.8763 and 0.8820

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in long positions on Wednesday, reversing the direction we have seen since late last week. This is not consistent with the movement of the pair, as the Australian dollar has posted small losses. The ratio has a majority of long positions, indicative of trader bias towards AUD/USD moving higher.

AUD/USD Fundamentals

• 00:30 Australian GDP. Estimate 0.7%. Actual 0.3%.
• 13:15 US ADP Nonfarm Employment Change. Estimate 223K. Actual 208K.
• 13:30 US Revised Nonfarm Productivity. Estimate 2.3%. Actual 2.3%.
• 13:30 US Revised Unit Labor Costs. Estimate 0.3%. Actual -1.0%.
• 14:45 US Final Services PMI. Estimate 56.3 points.
• 15:00 ISM Non-Manufacturing PMI. Estimate 57.5 points. Actual 59.3 points.
• 15:30 US Crude Oil Inventories. Estimate 1.1M.
• 17:30 US FOMC Member Charles Plosser Speaks.
• 19:00 US Beige Book.
• 19:00 US FOMC Member Lael Brainard Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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