AUD/USD – Aussie Rally Continues as Retail Sales Matches Forecast

AUD/USD continues to push higher, as the pair trades in the high-0.93 range on Thursday. The Australian dollar has shown some strength, gaining about 100 points since Tuesday. In Australia, Retail Sales came in at 0.4%, matching the forecast. As well, the trade deficit narrowed in August. In the US, employment data was soft, as ADP Nonfarm Payrolls and Unemployment Claims both missed expectations. The trade deficit improved last month, and we’ll get a look at ISM Non-Manufacturing PMI later in the day.

US employment numbers were a disappointment on Thursday. ADP Nonfarm Payrolls slipped to 204 thousand last month, marking a 3-month low. This was well off the estimate of 218 thousand. Unemployment Claims edged higher to 302 thousand, above the estimate of 298 thousand. Will the official Nonfarm Payrolls follow suit with a weak reading? Last month’s release missed expectations, and if the key indicator repeats with another weak reading, the US dollar could lose more ground to the pesky Aussie.

Australian Retail Sales softened in August with a reading of 0.4%, compared to a 0.6% gain a month earlier. Trade Balance improved to -$40.5 billion, beating the estimate of -$42.5 billion. This marked a 4-month low for the trade deficit. In readings earlier this week, Australian GDP slipped to 0.5% in Q2, its lowest level since Q3 of 2012. However, the markets chose to focus on the positive, which was the fact that the indicator edged above the estimate of 0.4%. As expected, the RBA held rates at 2.50% on Tuesday, and RBA Governor Glenn Stevens stated on Wednesday that the central bank had no plans to adjust interest rates. The RBA has now kept the benchmark rate at a historic low of 2.5 per cent for 13 months. The central bank finds itself with little wiggle room – it is reluctant to raise rates as the economy remains fragile, but is also unwilling to cut rates and fuel a hot housing market. The RBA also took a swipe at the high value of the Australian dollar, saying that it was weighing on efforts to increase economic growth.

AUD/USD for Thursday, September 4, 2014

AUD/USD September 4 at 13:20 GMT

AUD/USD 0.9376 H: 0.9392 L: 0.9330

AUD/USD Technical

• AUD/USD had an uneventful Asian session. The pair touched a high of 0.9392 in the European session but then retracted.
• 0.9361 has reverted to a support role as the Australian dollar continues to move higher. 0.9229 is a stronger support line.
• 0.9446 is the next resistance line.
• Current range: 0.9361 to 0.9446

Further levels in both directions:

• Below: 0.9361, 0.9229, 0.9119 and 0.9020
• Above: 0.9446, 0.9617, 0.9757 and 0.9879

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in short positions on Thursday. With AUD/USD posting strong gains in the past two days, many long positions have been covered, resulting in gains in short positions. The ratio has a slight majority of open long positions, indicative of trader bias towards the Australian dollar continuing to push higher against the greenback.

AUD/USD Fundamentals

• 1:30 Australian Retail Sales. Estimate 0.4%. Actual 0.4%.
• 1:30 Australian Trade Balance. Estimate -1.77B. Actual -1.36B.
• 11:30 US Challenger Job Cuts. Actual -20.7%.
• 12:15 US ADP Non-Farm Employment Change. Estimate 218K. Actual 204K.
• 12:30 US Trade Balance. Estimate -42.5B. Actual -40.5B.
• 12:30 US Unemployment Claims. Estimate 298K. Actual 302K.
• 12:30 US Revised Nonfarm Productivity. Estimate 2.5%. Actual 2.3%.
• 12:30 US Revised Unit Labor Costs. Estimate 0.6%. Actual -0.1%.
• 13:45 US Final Services PMI. Estimate 58.5 points.
• 14:00 US ISM Nonfarm Manufacturing PMI. Estimate 57.3 points.
• 14:30 US Natural Gas Storage. Estimate 72B.
• 15:00 US Crude Oil Inventories. Estimate -0.9M.
• 16:30 US FOMC Member Loretta Mester Speaks.
• 23:00 US FOMC Member Jerome Powell Speaks.

* Key releases are highlighted in bold

*All release times are GMT

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.