The Australian dollar has posted strong gains on Thursday, reversing the losses which marked the Wednesday session. AUD/USD is trading at the 0.77 line in the European session. In economic news, Australian employment numbers sparkled in March. Employment Change jumped by 26.1 thousand, while the unemployment rate dipped to 5.7%, as both indicators beat expectations. MI Inflation Expectations improved to 3.6%. Later in the day, the US will release consumer inflation reports, as well as Unemployment Claims. On Friday, we’ll get a look at the UoM Consumer Sentiment Index, a key gauge of consumer confidence.
Australia posted excellent job numbers in March, helping the Aussie push above the 0.77 line on Thursday. Employment Change jumped by 26.1 thousand, easily beating the forecast of 18.6 thousand. This was the indicator’s strongest reading in 4 months. The unemployment rate followed suit, falling from 5.9% to 5.7%, the lowest jobless rate since October 2013. The strong job numbers correlate with a strong rise in business confidence, and give the RBA some breathing room regarding rate cuts. The central bank has stated on numerous occasions that it will cut rates if economic conditions warrant, but a stronger labor market could help create more inflation and allow the RBA to remain on the sidelines at its next policy meeting in May.
The Australian consumer remains pessimistic about economic conditions according to the Westpac Consumer Sentiment Index. In March, the indicator slid 4.4%, following a decline of 2.2% a month earlier. Consumer confidence is closely linked to consumer spending, a key engine of economic growth. Australia is already reeling from weak global demand, in particular the Chinese slowdown. Weaker domestic demand would spell more trouble for the economy and could weaken the Australian dollar. Earlier this week, there was better news from the business sector, as NAB Business Confidence jumped to 6 points in March, compared to 3 points a month earlier. This marked the indicator’s strongest showing since June 2015.
The US released retail sales and inflation reports on Wednesday, and the results were a disappointment across the board. Core Retail Sales improved to 0.2%, but fell short of the forecast of 0.4%. Retail Sales surprised with a decline of 0.3%, shy of the estimate of a 0.1% gain. This marked the second straight drop for the indicator. Consumer spending represents the biggest part of the economy, so these figures could spell trouble at a time that the export sector remains soft due to weak global demand.  There was no relief from PPI, a key gauge of inflation in the manufacturing sector. The index dipped 0.1%, its third decline in four releases. This was well off the estimate of a 0.3% gain. Will we see some relief from CPI on Thursday? If not, the dollar could lose ground. A weak reading would also raise concerns about the strength of the US economy, and could dent hopes for a June rate hike by the Federal Reserve, which is unlikely to make any moves before inflation levels rise.
Wednesday (April 13)
- 21:00 Australian MI Inflation Expectations. Actual 3.6%
- 21:30 Australian Employment Change. Estimate 18.6K. Actual 26.1K
- 21:30 Australian Unemployment Rate. Estimate 5.9%. Actual 5.7%
Thursday (April 14)
- 8:30 US CPI. Estimate 0.2%
- 8:30 US Core CPI. Estimate 0.2%
- 8:30 US Unemployment Claims. Estimate 270K
- 10:30 FOMC Member Jerome Powell Speaks
- 10:30 US Natural Gas Storage. Estimate 1B
- 13:01 US 30-year Bond Auction
- 21:30 RBA Financial Stability Review
Upcoming Key Events
Friday (April 15)
- 10:00 US Preliminary UoM Consumer Sentiment. Estimate 91.9
*All release times are DST
AUD/USD for Thursday, April 14, 2016
AUD/USD April 14 at 7:25 DST
Open: 0.7659 Low: 0.7620 High: 0.7719 Close: 0.7714
- AUD/USD was uneventful in the Asian session and has posted strong gains in European trade
- 0.7678 has switched to support following strong gains by AUD/USD
- There is resistance at 0.7796
- Current range: 0.7678 to 0.7796
Further levels in both directions:
- Below: 0.7678, 0.7560, 0.7472 and 0.7385
- Above: 0.7796, 0.7913 and 0.8054
OANDA’s Open Positions Ratio
The AUD/USD ratio is almost unchanged on Thursday. Short positions have a majority of positions (41%), indicative of trader bias towards the pair reversing directions and losing ground.
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.