The Australian dollar has posted slight losses on Thursday, as AUD/USD trades at 0.6913 in the European session. On the release front, Australian Employment Change declined by 1,000, while the Unemployment Rate remained steady at 5.8%. We’ll get a look at Australian Home Loans later in the day. In the US, the key event on the schedule is Unemployment Claims, with the estimate standing at 275 thousand.
The Aussie has started off the New Year in dismal fashion, as AUD/USD has plunged almost 300 points in January. The pair has slipped below the symbolic 0.70 level and is currently trading at 4-month lows. The risky Australian dollar has been hit hard by recent events in China, with the Chinese stock market meltdown and the devaluation of the Chinese yuan. Geopolitical tensions in Korea, the Persian Gulf and Indonesia have also contributed to significant movement away from minor currencies like the Aussie, helping the US dollar to continue pushing higher. December employment data from Australia was decent, but failed to stop the Aussie’s slide. Employment Change declined by 1000, but this was much better than the estimate of 11,000. The unemployment rate remained steady at 5.8%. With investors remaining jittery about China and geopolitical tensions, there is little appetite for risk and the Australian dollar’s descent could continue.
In a historic move, the Federal Reserve raised interest rates in December for the first time in nine years, and hinted that this move was the first of a series in 2016. Not surprisingly, this has led to intense market speculation as to when the Fed might strike again. A rate hike in late January is not seen as likely, coming so soon after the December move. Many experts are forecasting another hike in March, contingent on a strong US economy. Although the economy is in good shape, one major area of concern is the inflation picture. Inflation levels have not kept up with other economic indicators and remain at low levels. The minutes of the December meeting indicated that some Fed members strongly considered voting against a rate hike due to weak inflation. Another concern is a lack of wage growth, despite a robust labor market. This was underscored by the last Average Hourly Earnings report, which came in at a flat 0.0% in December. The Fed will be carefully monitoring inflation and wage growth data before deciding to raise rates again early in 2016.
Wednesday (Jan. 13)
- 19:30 Australian Employment Change. Estimate -11.0K. Actual -1.0K
- 19:30 Australian Unemployment Rate. Estimate 5.9%. Actual 5.8%
Thursday (Jan. 14)
- 8:30 US Unemployment Claims. Estimate 275K. Actual 281K
- 8:30 US FOMC James Bullard Speaks
- 8:30 US Import Prices. Estimate -1.4%. Actual -1.2%
- 10:30 US Natural Gas Storage. Estimate -152B
- 13:01 US 30-year Bond Auction
- 19:30 Australian Home Loans. Estimate -0.4%
Upcoming Key Events
Friday (Jan. 15)
- 8:30 US Core Retail Sales. Estimate 0.2%
- 8:30 US PPI. Estimate -0.2%
- 8:30 US Retail Sales. Estimate -0.1%
*Key releases are highlighted in bold
*All release times are EST
AUD/USD for Thursday, January 14, 2016
AUD/USD January 14 at 6:40 EST
AUD/USD Open: 0.6935 Low: 0.6916 High: 0.6973 Close: 0.6916
- 0.6848 is providing support
- 0.6931 has switched to a resistance role as the pair has lost ground
- Current range: 0.6848 to 0.6931
Further levels in both directions:
- Below: 0.6848 and 0.6754 and 0.6625
- Above: 0.6931, 0.7063, 0.7100 and 0.7213
OANDA’s Open Positions Ratio
AUD/USD ratio has reversed directions and is showing movement towards long positions. Long positions command a majority of positions (61%), indicative of trader bias towards the pair continuing to move higher.