AUD/USD – Aussie Steady as Business Confidence Slides

AUD/USD is showing little movement on Wednesday, as the pair trades just shy of the 0.78 line. On the release front, Australian NAB Quarterly Business Confidence slipped to 2 points in Q4. In the US, there are two key releases on the calendar – ADP Nonfarm Employment Change softened in January, coming in at 213 thousand. Later in the day, we’ll get a look at ISM Non-Manufacturing PMI.

In Australia, NAB Quarterly Business Confidence disappointed, as the key indicator dropped to 2 points in Q4, down from 6 points in Q3. Business confidence is a key component of economic growth, so this soft reading is a cause for concern. Earlier in the week, the RBA surprised the markets with a 0.25% cut, lowering rates from 2.50% to 2.25%. There had been talk of the RBA cutting interest rates, but the experts didn’t expect any move until later in the year. RBA Governor Glenn Stevens noted that the Australian currency remains overvalued and that the economic growth will remain low. The Australian dollar reacted with a sharp drop of over 100 points on Tuesday.

US employment numbers will be in the spotlight for the remainder of the week. ADP Nonfarm Employment Change was well off expectations, and the estimates for Unemployment Claims and the official Nonfarm Employment Change also call for weaker readings. If the forecasts prove correct that the labor market has started off 2015 on a weak note, we could see the dollar lose ground against its major rivals.

AUD/USD for Wednesday, February 4, 2015

AUD/USD February 4 at 13:20 GMT

AUD/USD 0.7791 H: 0.7847 L: 0.7753

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.7403 0.7582 0.7684 0.7799 0.7904 0.8081

 

  • AUD/USD has stabilized after sharp losses on Tuesday. The pair was slightly higher in the Asian session, testing resistance at 0.7799. The pair has given up these gains in European trade.
  • On the downside, 0.7799 is under pressure. Will the pair break above this line in the North American session? 0.7904 is stronger.
  • 0.7684 is a strong support level.
  • Current range: 0.7684 to 0.7799

Further levels in both directions:

  • Below: 0.7684, 0.7582, 0.7403 and 0.7265
  • Above: 0.7799, 0.7904, 0.8081, 0.8150 and 0.8214

 

OANDA’s Open Positions Ratio

AUD/USD ratio is almost unchanged on Wednesday, continuing the direction seen a day earlier. This is consistent with the lack of movement displayed by the pair. The ratio remains close to a split between long and short positions, indicative of a lack of trader bias as to what direction the AUD/USD will take next.

AUD/USD Fundamentals

  • 00:30 Australian NAB Quarterly Business Confidence. Actual 2 points.
  • 13:15 US ADP Non-Farm Employment Change. Estimate 224K. Actual 213K.
  • 14:45 US Final Services PMI. Estimate 54.3 points.
  • 15:00 US ISM Non-Manufacturing PMI. Estimate 56.6 points.
  • 15:30 US Crude Oil Inventories. Estimate 4.0M.

*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.