AUD/USD – Little Net Movement as Aussie Trade Balance Disappoints, US Key Numbers Mixed

The Australian dollar posted gains on Thursday, but was unable to consolidate and is trading just above the 0.73 line in the North American session. In economic news, Australian Trade Balance disappointed, with the deficit widening to A$3.31. Early on Friday, we’ll get a look at Australian Retail Sales. In the US, Unemployment Claims almost matched the estimate, rising to 268 thousand. ISM Non-Manufacturing PMI slipped to 55.9 points, missing expectations. As well, Federal Reserve Chair Janet Yellen testifies before the Joint Economic Committee in Washington.

Australian GDP posted a strong gain of 0.9% in the third quarter, beating the estimate of 0.7%. The Aussie took full advantage of the positive report and posted gains of close to 100 points, as AUD/USD trades at its highest level in 7 weeks. Earlier in the week, the RBA held interest rates at 2.00%, and the RBA statement had an optimistic tone about the economy, helping the Australian dollar gain ground. Earlier in the week, there were no surprises from the RBA, which held interest rates at 2.00%. The central bank reiterated that it would consider cutting rates if the economy took a turn for the worse. We’ve heard this record before, but the RBA sounded somewhat optimistic about the Australian economy, stating that “the prospects for an improvement in economic conditions had firmed a little over recent months”. Although one could argue that this was a rather tepid thumbs-up on the part of policymakers, it was still enough of a springboard for investors to snap up Australian dollars, sending the currency to higher levels.

US employment data has looked solid this week, starting with a strong surge from ADP Nonfarm Payrolls. The key indicator climbed to 217 thousand, easily beating the estimate of 191 thousand. This marked a sharp rebound from the previous release of 182 thousand. On Thursday, Unemployment Claims came in just a shade below the forecast, rising to 268 thousand, compared to last week’s reading of 260 thousand. The employment event parade concludes on Friday, with the official Nonfarm Payrolls report. The markets are braced for a strong downturn, with an estimate of 201 thousand. With the markets abuzz over continuing speculation about a rate hike later in the month, these employment releases will be under the market microscope and could result in volatility on the currency markets.

US PMI reports, key gauges of economic activity, have not had a particularly good week. On Tuesday, ISM Manufacturing PMI slipped to 48.6 points in November. This figure fell short of the estimate of 50.6 points, and marked the first contraction of the index since May 2013. Recent manufacturing releases were also soft, as the US manufacturing sector continues to struggle. There wasn’t any relief from ISM Non-Manufacturing PMI on Thursday, as the index slipped to 55.9 points, well short of the forecast of 58.1 points. This marked a six-week low for the indicator. The silver lining is that although the index took a hit in November, the reading was still above the 50 line, indicative of expansion.

AUD/USD Fundamentals

Thursday (Dec. 3)

• 00:00 Australian HIA New Home Sales. Actual -3.0%
• 00:30 Australian Trade Balance. Estimate -2.61B. Actual -3.31B
• 12:30 US Challenger Job Cuts. Actual -13.9%
• 13:30 US Unemployment Claims. Estimate 269K. Actual 268K
• 14:45 US Final Services PMI. Estimate 56.5 points. Actual 56.1 points
• 15:00 US Fed Chair Janet Yellen Testifies
• 15:00 US ISM Non-Manufacturing PMI. Estimate 58.1 points. Actual 55.9 points
• 15:00 US Factory Orders. Estimate 1.2%. Actual 1.5%
• 15:30 US Natural Gas Storage. Estimate -22B
• 18:10 US FOMC Member Stanley Fischer Speaks

Upcoming Key Events

Friday (Dec. 4)

• 00:30 Australian Retail Sales. Estimate 0.4%
• 13:30 US Average Hourly Earnings. Estimate 0.2%
• 13:30 US Nonfarm Employment Change. Estimate 201K
• 13:30 US Unemployment Rate. Estimate 5.0%

*Key releases are highlighted in bold

*All release times are GMT

AUD/USD for Thursday, December 3, 2015

AUD/USD December 3 at 17:00 GMT

AUD/USD 0.7311 H: 0.7350 L: 0.7283

AUD/USD Technical

• 0.7213 is providing strong support.
• 0.7349 is a weak resistance line and  was tested earlier.
• Current range: 0.7213 to 0.7349

Further levels in both directions:

• Below: 0.7213, 0.7100 and 0.7063
• Above: 0.7349, 0.7440, 0.7526 and 0.7644

OANDA’s Open Positions Ratio

AUD/USD ratio is showing little movement, as short positions continue to retain a slight majority (56%). This is indicative of a slight trader bias towards the pair moving lower.

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.