AUD/USD – Aussie Unable to Consolidate Gains After Mixed Australian Employment Numbers

The Australian dollar pushed higher on Wednesday, but coughed up these gains in Thursday trading. AUD/USD was trading in the mid-0.91 range in Thursday’s North American session. The US dollar was broadly weaker on Wednesday, as the minutes of the Federal Reserve’s last policy meeting pointed to a deep split over tapering QE. On Thursday, Australian MI Inflation Expectations climbed to a nine-month high. Employment Change looked solid, but the Unemployment Rate rose. In the US, Unemployment Claims disappointed, climbing to an eight-week high.

On Wednesday, the dollar took a hit courtesy of the Federal Reserve, and was broadly weaker against the major currencies as a result. The minutes indicated that Federal Reserve policymakers remain deeply divided over when to scale down the current round of QE, whereby the Fed purchases $85 billion in assets each month. About half of the Fed policymakers favor scaling down QE before the end of 2013, while others feel that the employment market is still too fragile for the Federal Reserve to take any action. The dollar continued to lose ground as Federal Reserve chair Bernanke gave a speech in which he said that the Fed would maintain a loose monetary policy for the foreseeable future, due to low levels of inflation and a high US unemployment rate.

After a couple of solid readings, US Unemployment Claims looked weak, rising to 360 thousand. This was well above the estimate of 342 thousand, and was the highest level since mid-May. Given the turbulence in the markets over whether the Federal Reserve will scale down QE, US employment releases will remain under the market microscope, as stronger employment data could result in the Fed taking action and tapering QE.

Australian employment data looked strong, as Employment Change jumped from 1.1 thousand to 10.3 thousand in June. The markets had expected a negligible gain of 0.3 thousand. However, full-time positions actually decreased, while part-time jobs posted gains. The Unemployment Rate climbed from 5.5% to 5.7%, edging above the estimate of 5.6%. This is the highest rate in almost four years, and points to continuing weakness in the labor market. Meanwhile, MI Inflation Expectations, which is used to track actual inflation figures, jumped from 2.3% to 2.6% in June, its highest level since October 2012.

AUD/USD for Thursday, July 11, 2013

AUD/USD July 11 at 15:45 GMT

AUD/USD 0.9145 H: 0.9306 L: 0.9120

AUD/USD Technical

On Thursday, AUD/USD coughed up its gains from Wednesday, leaving the proximate support and resistance levels in place (S1 and R1 above). The pair continues to face resistance at 0.9221. This is followed by resistance at 0.9328. On the downside, there is support at 0.9135. This is a weak line, and could fall if the Aussie continues to lose ground. The next support level is at 0.9071.

Current range: 0.9135 to 0.9221

Further levels in both directions:

• Below: 0.9135, 0.9071, 0.9000, 0.8916 and 0.8747
• Above: 0.9221, 0.9328, 0.9405, 0.9541 and 0.9651

OANDA’s Open Positions Ratio

AUD/USD ratio is back in action after a lull on Wednesday, pointing to movement towards long positions. This is not reflected in the current movement of the pair, as the dollar has recovered from Wednesday’s losses. The ratio continues to be dominated by long positions, indicating a strong bias towards AUD/USD moving upwards.

We’re seeing some volatility in AUD/USD, as the pair shows sharp movement in each direction. We could see further volatility on Friday, as the US releases key inflation and consumer confidence numbers.

AUD/USD Fundamentals

• 1:00 Australian MI Inflation Expectations. Actual 2.6%
• 1:30 Australian Employment Change. Estimate 0.3K. Actual 10.3K.
•  1:30 Australian Unemployment Claims. Estimate 342K. Actual 360K.
• 12:30 US Import Prices. Estimate 0.1%. Actual -0.2%.
• 14:30 US Natural Gas Storage. Estimate 80B. Actual 82B.
• 15:00 US FOMC Member Daniel Tarullo Speaks.
• 17:00 US 30-year Bond Auction.
• 18:00 US Federal Budget Balance. Estimate 42.1 billion.

*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.