AUD/USD – Steady after Aussie Data Disappoints

AUD/USD is steady in Monday trading, as the pair trades in the low 1.04 range. In Australia, Building Approvals slumped badly, while ANZ Job Advertisements posted yet another decline. In the US last week ended on a mixed note. Employment numbers were a disappointment, as Non-Farm Payrolls did not meet the estimate and the unemployment rate moved higher. However, consumer sentiment and manufacturing data looked sharp.

The new trading week started with a whimper, as the markets were treated to some weak Australian releases. Building Approvals, a key indicator which tends to show a lot of volatility, dropped by 4.4%. This surprised the markets, which had anticipated a 1.1% gain. ANZ Job Advertisements showed improvement, but posted a decline of 0.9%. The employment indicator has now recorded declines in ten consecutive releases. MI Inflation Gauge came in with a modest 0.4% gain, very close to the previous reading. On Friday, Chinese Manufacturing PMI was down slightly, disappointing the markets. The key index came in at 50.4 points, below the estimate of 51.1 points. Traders should keep an eye on significant Chinese releases, as China is Australia’s most important trade partner, and Chinese data can affect AUD/USD. Tuesday could be an eventful day, with two key releases – Trade Balance, and the Reserve Bank of Australia’s Cash Rate.

US indicators continue to keep the markets guessing about the extent of the US recovery. Last week produced more mixed data. GDP was a major disappointment, as the economy contracted for the first time since 2009. Employment numbers lost their recent shine, as NFP and Unemployment Claims failed to meet expectations, and the unemployment rate inched up to 7.9%. On the bright side, last week’s consumer sentiment and manufacturing PMI data was very strong. UoM Consumer Sentiment climbed to 73.8 points, well above the estimate of 71.4 points. ISM Manufacturing PMI hit an eight-month high of 53.1 points, easily exceeding the forecast of 50.8 points. With only a handful of key US releases this week, each one will find itself under the market microscope as the markets try to get a handle on where the US economy is headed.

The US Federal Reserve was in the spotlight last week, as the powerful US central bank met for a two-day policy meeting. There were no surprise developments, as the Fed stated it would continue its open-ended QE3 program until the outlook for the labor market “improves substantially”. The Fed noted that economic growth had stalled, but was confident that the pause was a temporary one. This laid to rest speculation that the current round of QE, under which the Fed is purchasing $85 billion a month in securities, might be terminated anytime soon. The Fed maintained its ultra-low benchmark interest rate, saying there would be no change until unemployment drops below 6.5%. With US unemployment hovering close to 8%, we’re unlikely to see this target met anytime soon.

AUD/USD for Monday, February 4, 2013

AUD/USD February 4 at 12:35 GMT

1.0430 H: 1.0431 L: 1.0410

AUD/USD Technical

AUD/USD is starting the week cautiously, as is trades in the 1.0430 range. The pair is receiving weak support at the 1.0424 line. Look for this line to see more activity in Monday trading. This is followed by a stronger support level at 1.0376. On the upside, there is resistance at 1.0473. This is followed by a stronger line at 1.0530.

Current range: 1.0424 to 1.0473.

Further levels in both directions:

• Below: 1.0424, 1.0376, 1.0334, 1.0230, 1.0174 and 1.0031.
• Above: 1.0473, 1.0530, 1.0605, 1.0718, 1.0874 and 1.0961.

OANDA’s Open Position Ratios

The AUD/USD ratio has continued where it left off last week, with little movement. We are seeing a similar trend in the currency pair, as AUD/USD trades quietly in the 1.0430 range. If some movement is detected in the ratio, it could be an indication that the pair will break out from this narrow band.

AUD/USD has not lost ground, despite some weak Australian data to start off the week. As there is only one US release on Monday, we could see the pair continue to trade quietly.

AUD/USD Fundamentals

• Sunday  23:30: Australian MI Inflation Gauge. Actual 0.3%. 
• Monday  00:30 Australian Building Approvals.  Estimate 1.1%. Actual -4.4%.
• Monday  00:30 Australian ANZ Job Advertisements. Actual -0.9%.
• Monday  15:00 US Factory Orders. Estimate 2.3%.

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.