The Australian dollar is unchanged on Thursday, as AUD/USD trades at 0.7210 in the North American session. In economic news, Australian NAB Quarterly Business Confidence slipped to 0 points in the third quarter, compared to 4 points in Q2. Over in the US, Unemployment Claims beat expectations for a second straight week, coming in at 255 thousand. On the housing front, Existing Home Sales impressed with a strong surge, improving to 5.55 million, well above expectations.
The RBA held rates at an even 2.00% earlier in October, and the minutes of this week’s policy meeting shed some light on the central bank’s thinking. Policymakers noted that the economy had shown some improvement, crediting this to the lower value of the Australian dollar, which has boosted exports, as well as the RBA’s ultra-low interest rate levels. The minutes noted concern about the China economy, but said that despite this, there was no need to lower rates for some time. Interestingly, policymakers said that some players in the financial markets don’t expect the Federal Reserve to raise rates for the “foreseeable future”.
US releases looked sharp on Thursday, as Unemployment Claims, a key release, came in at 259 thousand, beating the estimate of 266 thousand. This was slightly higher than the previous reading of 255 thousand, but marked the third straight week that the indicator beat the forecast. The four-week moving average of claims, which reduces the volatility of the weekly jobless reports, is currently at its lowest level since 1973. These figures point to a stronger labor market, but the next big test comes in early November, with the publication of Nonfarm Payrolls. Meanwhile, Existing Housing Sales had a banner September, improving to 5.55 million, crushing the estimate of 5.38 million. We’ll get a look at additional housing indicators next week.
Recent US data has not been has strong as hoped, with key numbers sending a mixed message about the health of the economy. This has reduced the likelihood of a rate hike by the Federal Reserve before the end of 2015. The markets remain frustrated about the Fed’s lack of communication with the markets, as FOMC members continue to send out contradictory messages about the Fed’s plans. Still, an improvement in US numbers, especially employment and consumer indicators, could quickly revive speculation about a rate hike and boost the US dollar. Next week promises to be interesting, as the Federal Reserve issues a policy statement after its meeting. This will be followed by the release of the Advance GDP report, a market-mover event.
China has overtaken Japan as the world’s second largest economy, so when the Asian giant publishes data, the markets listen closely. Chinese GDP dipped to 6.9% in Q3, down from 7.0% in the past two quarters. Still, the markets preferred to view the cup as half full, noting that the forecast called for a gain of 6.8%. In an effort to spur growth, the Chinese central bank has cut interest rates five times since November an increased spending. The effect that China is having on the global economy and markets cannot be emphasized enough, and the Federal Reserve recently pointed at slower Chinese growth as a key factor in deciding not to raise US interest rates. Chinese Industrial Production also disappointed with a 5.7% in September, short of the estimate of 6.0%.
Thursday (Oct. 22)
- 00:30 Australian NAB Quarterly Business Confidence. Actual 0 points.
- 12:30 US Unemployment Claims. Estimate 266K. Actual 255K.
- 13:00 US HPI. Estimate 0.4%. Estimate 0.3%.
- 14:00 US Existing Home Sales. Estimate 5.38M. Actual 5.55M.
- 14:00 US CB Leading Index. Estimate 0.0%. Actual -0.2%.
- 14:30 US Natural Gas Storage. Estimate 89B. Actual 81B.
*Key releases are highlighted in bold
*All release times are GMT
AUD/USD for Thursday, October 22, 2015
USD/JPY October 21 at 14:20 GMT
USD/JPY 0.7213 H: 0.7239 L: 0.7177
- AUD/USD has been uneventful throughout the day.
- On the downside, 0.7213 was tested earlier in the day and remains under strong pressure.
- 0.7440 is a strong resistance line.
- Current range: 0.7213 to 0.7440
Further levels in both directions:
- Below: 0.7213, 0.7100, 0.7060 and 0.70
- Above: 0.7440, 0.7664, 0.7770 and 0.7849
OANDA’s Open Positions Ratio
AUD/USD ratio is showing little movement on Thursday, and long and short positions are almost evenly split (52%), indicative of a lack of a trader bias as to what direction the pair will take next.
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.