AUD/USD – Sharp Gains after Solid Aussie Employment Numbers

The Australian dollar continues to rack up gains, and has risen over one cent in Thursday trading. AUD/USD is trading in the high-95 range in the European session. The Aussie got a boost from strong domestic employment numbers on Thursday. In the US, there are three major releases later today – Retail Sales, Core Retail Sales and Unemployment Claims.

After dropping close to 3-year lows, the Australian dollar is showing some life, thanks to some positive key domestic releases this week. Westpac Consumer Sentiment recorded a four-month high, with a strong gain of 4.7%. On Thursday, Employment Change posted a modest gain of 1.1 thousand, blowing past the estimate of -9.8 thousand. The Unemployment Rate remained unchanged at 5.5%, slightly better than the forecast of 5.6%. The Australian dollar has taken advantage of these readings and enjoyed a nice rally this week, climbing about 150 points.

Taking a look at the US, there was some good news from the S&P ratings agency on Monday, as the well-respected firm revised the US sovereign credit rating from negative to stable. This is an important vote of confidence in the US economy, and means that there is less than a 1 in 3 chance of another downgrade in the next two years. S&P noted that a key factor in its revision was the agreement reached in the US Congress which averted the fiscal cliff crisis, which would have led to $600 billion in automatic tax increases and spending cuts and could have pushed the fragile US economy into recession. In 2011, S&P cut the US credit rating from AAA to AA, and the threat of another downgrade has been a concern of the markets. This development will likely improve market sentiment and could give a boost to the US dollar.

The S&P decision could also affect the US Federal Reserve’s QE program, which involves the purchase of $85 billion in assets each month. The Fed has said that it won’t scale back the program before it sees a stronger economy and an improving employment picture. Although US releases continue to be mixed, speculation is rising that the Fed could take action in the next few months. Since QE is US dollar-negative, any tapering of QE could give a boost to the greenback and jolt the currency markets.

 AUD/USD for Thursday, June 13, 2013

AUD/USD June 13 at 12:30 GMT

AUD/USD 0.9566 H: 0.9585 L: 0.9430

AUD/USD Technical

AUD/USD has posted sharp gains on Thursday. On the upside, the pair faces resistance at 0.9651. This is followed by resistance at 0.9727. On the downside, the pair is receiving support at 0.9541. This is a weak line, and could be tested if the US is able to correct its current downward swing. There is a strong support line at 0.9405, protecting the 0.94 line.

Current range: 0.9541 to 0.9651

Further levels in both directions:

• Below: 0.9541, 0.9405, 0.9328, 0.9221, 0.9135 and 0.9071
• Above: 0.9651, 0.9727, 0.9795 and 0.9842

OANDA’s Open Positions Ratio

AUD/USD ratio has switched directions, and is pointing to movement towards long positions in the Thursday session. This is reflected in the current movement of the pair, as the Aussie has posted sharp gains against the US dollar. Long positions continue to make up most of the ratio, indicating that trader sentiment is strongly biased towards the Australian dollar continuing to push higher.

The Australian dollar has moved higher, thanks to some solid domestic releases this week. We could see more activity from the pair, as the US releases its first key events of the week later today.

AUD/USD Fundamentals

• 1:30 Australian MI Inflation Expectations. Actual 2.3%
• 1:30 Australian Employment Change. Estimate -9.8K. Actual 1.1K
• 1:30 Australian Unemployment Rate. Estimate 5.6%. Actual 5.5%
• 12:30 US Core Retail Sales. Estimate 0.3%
• 12:30 US Retail Sales. Estimate 0.4%
• 12:30 US Unemployment Claims. Estimate 354K
• 12:30 US Import Prices. Estimate 0.0%
• 14:00 US Business Inventories. Estimate 0.3%
• 14:30 US Natural Gas Storage. Estimate 96B
• 17:00 US 30-year Bond Auction

*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.