AUD/USD – Aussie Loses Ground As US Building Permits Sparkles

The Australian dollar has resumed its losing ways in Tuesday trading. AUD/USD is down close to one cent, as the pair trades close to the 0.91 line. The US dollar got a boost as the October Building Permits topped the 1 million level, posting its best numbers in over five years. Building Permits for September also beat the estimate. Later on Tuesday, the markets will get a look at CB Consumer Confidence, a key event. There are no Australian releases on Tuesday.

The week started with on a sour note, as US Pending Home Sales posted another decline. However, the tune was markedly different on Tuesday, as Building Permits pushed over the 1 million mark, hitting 1.03 million units. This was the highest level since June 2008 and beat the estimate of 0.94 million. The September release, which had been postponed due to the government shutdown last month, came in at 0.97 million, above the estimate of 0.94 million.

Low inflation indicators have been a major concern in Japan and the Eurozone, and the US economy is not immune from this problem. The Producer Price Index continues to look weak, posting a decline of 0.2% in October. This was the index’s second straight decline. Core CPI showed a weak gain of 0.1%, and CPI dipped to -0.1%. These weak numbers have raised concerns about the strength of the US economy.

The RBA continues to try and “talk down” the Australian dollar, which the Bank says is impeding economic growth due to its high value. Senior officials at the RBA continue to hammer home this message, and did not mince words in last week’s minutes, stating that “a lower level of the exchange rate would likely be needed to achieve balanced growth in the economy”. The Aussie lost about two cents last week, but this may not be enough for the RBA, which wants to see the currency below the 0.90 level. Clearly, the Bank has been reluctant to take action and reduce interest rates, but the RBA has been dropping broad hints that this could change.

AUD/USD for Tuesday, November 26, 2013

AUD/USD November 26 at 14:05 GMT

AUD/USD 0.9105 H: 0.9204 L: 0.9104

AUD/USD Technical

• AUD/USD has posted sharp losses in Tuesday trading. The pair has dipped below the 0.91 line early in the North American session, its lowest level since early-September.
• The pair is receiving support at the key level of 0.9000. This is followed by a support level at 0.8893.
• AUD/USD is facing resistance at 0.9119. This is a weak line which could see activity during the day. This is followed by a resistance line at 0.9229.
• Current range: 0.9000 to 0.9119

Further levels in both directions:

• Below: 0.9000, 0.8893, 0.8735 and 0.8658
• Above: 0.9119, 0.9200, 0.9305, 0.9400 and 0.9508

OANDA’s Open Positions Ratio

AUD/USD is unchanged in Tuesday trading, continuing the trend which began on Monday. This is not reflected in the current movement of the pair, as the Australian dollar has posted sharp losses. The ratio is made up of a substantial majority of long positions, reflecting a trader bias towards the Australian dollar reversing directions and moving to higher ground.

The pair has moved lower following strong US construction data. We could see more movement during the North American session, as the US releases key consumer confidence numbers.

AUD/USD Fundamentals

• 13:30 US Building Permits. Estimate 0.94M. Actual 1.03M.
• 13:30  September Data – US Building Permits. Estimate 0.94M. Actual 0.97M.
• 14:00 US S&P/CS Composite-20 HPI. Estimate 13.0%. Actual 13.3%.
• 14:00 US HPI. Estimate 0.5%. Actual 0.3%.
• 15:00 US CB Consumer Confidence. Estimate 72.2 points. Actual 70.4 points.
• 15:00 US Richmond Manufacturing Index. Estimate 3 points. Actual 13 points.

*Key releases are highlighted in bold

*All release times are GMT

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