AUD/USD – Aussie Higher as US Consumer Confidence Slumps

The Australian dollar has posted slight losses on Tuesday, as AUD/USD trades at 0.7230 in the North American session. On the release front, US Preliminary GDP posted a gain of 2.1%, while CB Consumer Confidence dropped sharply to 90.4 points. On Wednesday, there are two key major events – Core Durable Goods Orders and Unemployment Claims.

There were no surprises from US Preliminary GDP in the third quarter. The revised GDP report came in at 2.1%, very close to the Advanced GDP reading of 2.0%. Although these numbers pale in comparison to the blistering 3.7% we saw in Q2, they nonetheless point to respectable growth by the US economy in a difficult global environment. Meanwhile, Consumer Confidence slipped badly, dropping to 90.4 points, compared to 97.6 points a month earlier. This was well off the estimate of 99.3 points, and marked the indicator’s weakest showing in 12 months. After this disappointing consumer confidence reading, the markets will be keeping a close eye on Wednesday’s consumer spending indicators, with the release of October’s durable goods reports.

Last week’s Fed minutes did not confirm a December rate hike, but most analysts feel that the long-awaited move will indeed occur next month. Market expectations have risen to 66% that the Fed will make a move next month, and recent comments by Fed policymakers have hinted that a rate move is a strong possibility. Last week, New York Fed President William Dudley said there is a “strong case” for a rate hike in December as long as economic data remains strong. At the past two policy meetings, the vote against a rate hike was 9-1, but that clearly will not be the outcome at the December meeting. With the US economy showing improvement and employment and consumer indicators pointing upwards, the markets appear prepared for a small hike of 0.25% or 0.50%, and there is a growing view that modest, incremental moves would not cause unwanted turbulence on the global markets. One remaining question mark in the rate move puzzle is that of inflation levels. Recent inflation readings have been weak, and the Fed has repeatedly stated that inflation is a key consideration in any decision to raise rates. The markets will get a look at key inflation indicators shortly before the critical Fed policy meeting on December 16.

AUD/USD Fundamentals

Tuesday (Nov. 24)

• 13:30 US Preliminary GDP. Estimate 2.0%. Actual 2.1%
• 13:30 US Goods Trade Balance. Estimate -61.8B. Actual -58.4B
• 13:30 US Preliminary GDP Price Index. Estimate 1.2%. Actual 1.3%
• 14:00 US S&P/CS Composite-20 HPI. Estimate 5.2%. Actual 5.5%
• 15:00 US CB Consumer Confidence. Estimate 99.3 points. Actual 90.4 points
• 15:00 US Richmond Manufacturing Index. Estimate 0 points. Actual -3 points

Upcoming Key Events

Wednesday (Nov. 25)

• 13:30 US Core Durable Goods Orders. Estimate 0.5%
• 13:30 US Unemployment Claims. Estimate 273K

*Key releases are highlighted in bold

*All release times are GMT

AUD/USD for Tuesday, November 24, 2015

AUD/USD November 24 at 15:55 GMT

AUD/USD 0.7227 H: 0.7238 L: 0.7185

AUD/USD Technical

• AUD/USD was flat in the Asian session and showed some movement in European trade. The pair has posted gains in the North American session.
• The round number of 0.71 is an immediate support level.
• 0.7213 is a weak resistance line.
• Current range: 0.7213 to 0.7440

Further levels in both directions:

• Below: 0.7213, 0.7100, 0.7063 and 0.7000
• Above: 0.7440, 0.7526 and 0.7644

OANDA’s Open Positions Ratio

AUD/USD ratio is showing little movement, with long and short positions close to an even split. This is indicative of a lack of 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.