AUD/USD – Aussie Takes Hit as Building Approvals Plunges

The Australian dollar lost over one cent on Monday against the US currency, after a dismal release from Australian Building Approvals. In European trade on Tuesday, AUD/USD had dropped below the 0.91 line. In the US, Pending Home Sales disappointed, as the key indicator posted a decline. Later on Tuesday, the US will release CB Consumer Confidence.

AUD/USD dropped sharply after a very poor release from Australian Building Approvals. The key construction indicator posted a decline of -6.9%, its worst showing since December 2012. The weak release raises questions about the health of the construction and housing industries, both of which are important engines for economic growth. We’ll get a look at housing data later in the week, with the release of HIA New Home Sales.

There was further pressure on the Aussie as RBA Governor Glenn Stevens hinted that there was further room for an interest rate reduction next week. Stevens complained about low business confidence, the end of the mining boom and even criticized the government for not providing a specific date for the election. This is not the first time that Stevens has made comments which have impacted on the currency markets. AUD/USD was down sharply, losing over one cent.

Over in the US, the direction of the housing sector is unclear, with recent releases pointing in all directions. On Monday, Pending Home Sales pointed to a decline of -0.4%, certainly not a strong release. Last week, Existing home sales fell to 5.08 million, way off the estimate of 5.27 million. However, New Home Sales showed strength, jumping from 476 thousand to 496 thousand, easily beating the estimate of 482 thousand. This was its best showing in five years. So where do we stand? With these inconclusive results, the markets will have to wait for the August housing releases, which hopefully will provide a clearer picture of the health and direction of the US housing industry.

AUD/USD for Tuesday, July 30, 2013

AUD/USD July 30 at 14:00 GMT

AUD/USD 0.9078 H: 0.9206 L: 0.9053

AUD/USD Technical

AUD/USD fell sharply late in the Tuesday Asian session, crashing below the 0.91 line. The pair is currently testing support at 0.9072. This line could fall if the Aussie continues to slump. The next line of support is at the critical 0.90 line. On the upside, the pair faces resistance at 0.9135. This is followed by resistance at 0.9221, which has strengthened as the pair trades at lower levels.

• Current range: 0.9072 to 0.9135

Further levels in both directions:

• Below: 0.9072, 0.9000, 0.8916 and 0.8747
• Above: 0.9135, 0.9221, 0.9328, 0.9405, 0.9541 and 0.9657

OANDA’s Open Positions Ratio

AUD/USD ratio has shown strong movement in the direction of long positions. With the pair suffering sharp losses, a large number of short positions have been covered, thus increasing the proportion of open long positions.

The Aussie has resumed its losing ways, as Building Approvals posted a sharp decline. With the US releasing key consumer confidence data later today, we could see more activity from AUD/USD.

AUD/USD Fundamentals

• 1:30 Australian Pending Home Sales. Estimate 2.2%. Actual -6.9%.
• 3:05 RBA Governor Glenn Stevens Speaks.
• 13:00 US S&P/CS Composite-20 HPI. Estimate 12.4%. Actual 12.2%.
• 14:00 US CB Consumer Confidence. Estimate 81.1 points.

*Key releases are highlighted in bold

*All release times are GMT

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