AUD/USD – Aussie Recovers After Sharp Losses

AUD/USD has posted moderate gains on Thursday, recovering much of the losses sustained a day earlier. The pair is trading in the high-0.81 range early in the North American session. In the US, Unemployment Claims dropped to 289 thousand, beating expectations. The Philly Fed Manufacturing Index fell to 24.5 points in December, short of the estimate. The only Australian release today is the RBA Bulletin, a minor event.

In the US, employment numbers continued to impress last week, as unemployment claims dropped to 289 thousand, the lowest level in six weeks. The easily beat the estimate of 297 thousand. The news was not as good on the manufacturing front, as the Philly Fed Manufacturing Index slid to 24.5 points, down from 40.6 points in November. The November reading was unusually high, and the markets had expected a sharp downturn, with the estimate standing at 26.3 points.

The Australian dollar recorded sharp losses after Wednesday’s Federal Reserve policy statement. Previous Fed policy statements have usually stated that the Fed would maintain low rates for a “considerable time”, but the December statement changed terminology, saying the Fed would be “patient” before raising rates. In a follow-press conference, Federal Reserve chair Janet Yellen was less ambiguous, saying that the Fed was unlikely to raise rates for the “next couple of meetings”. The markets took this to mean that a rate hike is in the works, but not before April. The Aussie took a hit after the news, losing about 100 points to the US dollar on Wednesday.

On Tuesday, the RBA released the minutes of its last policy meeting and policymakers took note of expectations in the market of a rate cut. The markets took this as a hint of a possible cut sometime in 2015, which puts the RBA on a divergent monetary stance to that of the Federal Reserve and the BOE, both of which are expected to raise rates next year. The minutes also noted that the central bank still considers the Aussie overvalued, especially with the recent declines in key commodity prices. Although the Aussie has dropped 12% since early September, the RBA minutes noted that the currency needed to drop further in order to achieve “balanced growth”. Last week, RBA Governor Glenn Stevens underscored this point, noting that he would like to see the Australian dollar at 75 US cents.

AUD/USD for Monday, December 22, 2014

AUD/USD December 21 at 15:55 GMT

AUD/USD 0.8136 H: 0.8173 L: 0.8132

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.7904 0.8081 0.8150 0.8214 0.8315 0.8456

 

  • AUD/USD was uneventful in the Asian session. The pair moved higher in the European session, breaking above resistance at 0.8150. AUD/USD is unchanged in North American trade.
  • On the upside, 0.8214 is under pressure and this line could break in the North American session. 0.8315 is stronger.
  • 0.8150 has reverted to a support role as the Aussie has moved higher. 0.8081 is stronger.
  • Current range: 0.8150 to 0.8214.

Further levels in both directions:

  • Below: 0.8150, 0.8081, 0.7904 and 0.7799
  • Above: 0.8214, 0.8315, 0.8456, 0.8550 and 0.8668

 

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in short positions on Thursday, reversing the movement seen a day earlier. This is not consistent with the pair, which has posted gains. The ratio has a majority of long positions, indicative of trader bias towards AUD/USD continuing to move higher.

AUD/USD Fundamentals

  • 00:30 Australian RBA Bulletin.
  • 13:30 US Unemployment Claims. Estimate 297K. Actual 289K.
  • 14:45 US Flash Services PMI. Estimate 57.1 points. Actual 53.6 points.
  • 15:00 US Philly Fed Manufacturing Index. Estimate 26.3 points. Actual 24.5 points.
  • 15:00 US CB Leading Index. Estimate 0.6%. Actual 0.6%.
  • 15:30 US Natural Gas Storage. Estimate -61B.

*Key releases are highlighted in bold

*All release times are GMT

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.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.