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AUD/USD – Aussie Steady, Markets Eye RBA Statement

The Australian dollar has started off the trading week quietly, as AUD/USD trades at 0.7120 in the North American session. On the release front, the week started with Australian Company Operating Profits recording a sharp drop of 2.8 percent, missing expectations. On Monday, Australia releases Building Approvals, and the RBA will issue a rate statement. In the US, there are just two releases – Chicago PMI and Pending Home Sales. There are two key events on Tuesday – US ISM Manufacturing PMI and Australian GDP.

Australian company profits looked weak in the fourth quarter, sliding 2.8 percent. This was much worse than the estimate of -1.7 percent. The markets are braced for a weak release from Building Permits, with an estimate of -2.9%. Meanwhile, the RBA is not expected to make any cuts to the benchmark rate, which currently stands at 2.00%. However, the RBA has maintained an easing bias, and any hints in the RBA rate statement about a cut in rates could push the Australian currency to lower levels.

It’s been a slow start in 2016 for the US economy, with soft growth and employment numbers in comparison with the red-hot numbers which characterized the second half of 2015. One sector which has been struggling badly is the manufacturing industry. The US economy has been grappling with a downturn in global demand, which has taken its toll on the export and manufacturing sectors. A strong US dollar, which has posted broad gains in recent months, has only exacerbated the situation. However, there was some positive news late in the week. US Preliminary GDP posted a strong gain of 1.0%, well above the estimate of 0.4%. There was also positive news from the manufacturing sector, as durable goods sparkled. Core Durable Goods rose 1.8%, crushing the estimate of 0.2%. This marked the key indicator’s strongest showing since March 2014. Durable Goods Orders followed suit with a sharp rise of 4.9%, rebounding from the previous reading of -5.1%. This was stronger than the estimate of 3.0%. Meanwhile, housing numbers have not impressed, as New Home Sales slipped to 494 thousand in January, compared to 544 thousand a month earlier. This figure was well short of the estimate of 522 thousand. Pending Home Sales will be released later on Monday, with the markets expecting a gain of 0.6%. If this housing release also misses expectations, the US dollar could respond with losses.

AUD/USD Fundamentals

Sunday (Feb. 28)

Monday (Feb. 29)

Upcoming Key Events

Tuesday (Mar. 1)

*Key releases are highlighted in bold

*All release times are EST

AUD/USD for Monday, February 29, 2016

AUD/USD February 29 at 9:10 EST

AUD/USD  Open: 0.7127 Low: 0.7107  High: 0.7167 Close: 0.7122

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.6931 0.7012 0.7100 0.7213 0.7385 0.7440

Further levels in both directions:

OANDA’s Open Positions Ratio

The AUD/USD ratio is showing long positions with a majority (54%). This is indicative of trader bias towards AUD/USD moving upwards.

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 [4]

Market Analyst at OANDA [5]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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