AUD/USD – Aussie Bounces Higher on Strong GDP Data

AUD/USD continues to show some volatility. After losing ground on Tuesday, the pair has recovered these losses on Wednesday, as the pair trades in the mid-0.93 range. The Aussie was supported by a GDP reading of 0.5%, which beat the estimate. As well, RBA Governor Glenn Stevens spoke in Adelaide and reiterated that there are no plans to adjust interest rates. In the US, there are no major events on the calendar. Factory Orders jumped 10.5% last month, slightly below expectations.

Australian GDP slipped to 0.5% in Q2, its lowest level since Q3 of 2012. However, the markets chose to focus on the positive, which was the fact that the indicator edged above the estimate of 0.4%. As expected, the RBA held rates at 2.50% on Tuesday, and RBA Governor Glenn Stevens stated on Wednesday that the central bank had no plans to adjust interest rates. The RBA has now kept the benchmark rate at a historic low of 2.5 per cent for 13 months. The central bank finds itself with little wiggle room – it is reluctant to raise rates as the economy remains fragile, but is also unwilling to cut rates and fuel a hot housing market. The RBA took a swipe at the high value of the Australian dollar, saying that it was weighing on efforts to increase economic growth.

US numbers continue to impress the markets. On Tuesday, ISM Manufacturing PMI impressed the markets, climbing to 59.0 points, its best showing since April 2011. The index easily beat the estimate of 57.0 points. The strong showing follows an unexpectedly strong GDP, which hit 4.2%. With the US economy moving forward at a fast clip, the US dollar has taken full advantage and has made broad gains this week against its major rivals. US Employment data will be in the spotlight for the remainder of the week, with the release of ADP Nonfarm Payrolls on Thursday, followed by the official Nonfarm Payrolls and the unemployment rate on Friday.

AUD/USD for Wednesday, September 3, 2014

AUD/USD September 3 at 15:05 GMT

AUD/USD 0.9344 H: 0.9348 L: 0.9263

AUD/USD Technical

• AUD/USD has been steadily moving higher since late in the Asian session.
• 0.9229 is providing strong support.
• 0.9361 is under pressure as the Australian dollar has posted gains. 0.9446 is stronger.
• Current range: 0.9229 to 0.9361

Further levels in both directions:

• Below: 0.9229, 0.9119, 0.9020 and 0.8916
• Above: 0.9361, 0.9446, 0.9617 and 0.9757

OANDA’s Open Positions Ratio

AUD/USD ratio has a majority of long positions, indicative of trader bias towards the Australian dollar continuing to push higher against the greenback.

AUD/USD Fundamentals

• 1:30 Australian GDP. Estimate 0.5%. Actual 0.4%.
• 3:20 RBA Governor Glenn Stevens Speaks in Adelaide.
• 14:00 US Factory Orders. Estimate 10.9%. Actual 10.9%.
• All Day – US Day Total Vehicle Sales. Estimate 16.5M.
• 18:00 US Beige Book.

* Key releases are highlighted in bold

*All release times are GMT

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