AUD/USD – Little Movement After Strong US Employment Report

AUD/USD has posted small losses on Wednesday, as the pair trades in the mid-0.80 range. On the release front, ADP Nonfarm Employment Change looked sharp, climbing to 241 thousand. Trade Balance also had a strong showing, as the trade deficit narrowed to $39.0 billion. There are no Australian releases on Wednesday, but we’ll get a look at Building Approvals early on Thursday.

US data looked strong on Wednesday. ADP Nonfarm Employment Change, the first employment release of the week, surged to 241 thousand, well above the estimate of 227 thousand. This was the best showing from the indicator since June. Meanwhile, the US trade deficit narrowed to $39.0 billion, the smallest deficit in 11 months.

The markets are keeping a close eye on the Federal Reserve minutes, which will be released later in the day. In its December policy statement, the Fed adjusted its language, saying it would be “patient” about raising rates, rather than its usual language of maintaining low rates for a “considerable time”. Now that the arduous QE journey has been completed, does the shift in language represent any change in monetary policy? The markets are hoping that the minutes can provide some clarity as to the timing of a rate hike.

Australian Trade Balance was stronger than expected, as the trade deficit narrowed in November to AUD -$0.93 billion, marking a 3-month low. This was well below the forecast of AUD -$1.59 billion. Meanwhile, Australian commodity prices continue to soften, as demand for Australian exports such as iron ore and gold has weakened. The Commodity Prices indicator continues to post sharp declines, and on Friday, the December report showed a loss of 21.2%. These readings point to trouble in the export sector, and the struggling Australian dollar lost about 100 points at the end of the week.

AUD/USD for Wednesday, January 7, 2015

AUD/USD January 7 at 15:15 GMT

AUD/USD 0.8050 H: 0.8082 L: 0.8049

AUD/USD Technical

• AUD/USD has shown limited movement during the day. The pair continues to trade close to resistance at 0.8081.
• 0.7904 is a strong support level.
• 0.8081 is a weak resistance line and could see action during the North American session. 0.8150 is stronger.
• Current range: 0.7904 to 0.8081.

Further levels in both directions:

• Below: 0.7904, 0.7799, 0.7701 and 0.7549
• Above: 0.8081, 0.8150, 0.8214, 0.8315 and 0.8456

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in long positions on Wednesday, reversing the direction seen a day earlier. 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

• 13:15 US ADP Nonfarm Employment Change. Estimate 227K. Actual 241K.
• 13:30 US Trade Balance. Estimate -42.3B. -39.0B.
• 15:30 US Crude Oil Inventories. Estimate 0.9M.
• 19:00 US FOMC Meeting Minutes.
• 23:30 FOMC Member Charles Evans Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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