AUD/USD – Steady as Retail Sales Meets Expectations

AUD/USD is showing little movement on Thursday, as the pair trades just shy of the 0.78 line. On the release front, Australian Retail Sales posted a gain of 0.2%. Over in the US, Unemployment Claims rose last week to 265 thousand but beat the estimate. Trade Balance missed expectations, coming in at $-46.6 billion.

In the US, Unemployment Claims rose to 278 thousand, up from 268 thousand in the previous release. Still, the reading beat the forecast of 287 thousand. On Wednesday, ADP Nonfarm Employment Change was well off expectations, falling to 213 thousand. The estimate stood at 224 thousand. Meanwhile, the trade deficit ballooned to $46.6 billion, compared to $39.0 billion a month earlier. This marked the largest trade deficit since May.

In Australia, Retail Sales, the key gauge of consumer spending, posted a weak gain of 0.2%. This was within expectations, as the estimate stood at 0.3%. Still, the weak reading points to sluggish consumer spending. The economy will have trouble shifting into higher gear if the Australian consumer doesn’t loosen the purse strings. NAB Quarterly Business Confidence disappointed, as the key indicator dropped to 2 points in Q4, down from 6 points in Q3. Business confidence is a key component of economic growth, so this soft reading is a cause for concern.

Earlier in the week, the RBA surprised the markets with a 0.25% cut, lowering rates from 2.50% to 2.25%. There had been talk of the RBA cutting interest rates, but the experts didn’t expect any move until later in the year. RBA Governor Glenn Stevens noted that the Australian currency remains overvalued and that the economic growth will remain low. The Australian dollar reacted with a sharp drop following the surprise rate cut.

AUD/USD for Thursday, February 5, 2015

AUD/USD February 5 at 15:40 GMT

AUD/USD 0.7794 H: 0.7824 L: 0.7734

AUD/USD Technical

• AUD/USD was uneventful in the Asian session. The pair posted gains in the European session, testing resistance at 0.7799 for a second straight day. The pair is unchanged in North American trade.
• On the upside, 0.7799 is fluid. Will the pair break above this line in the North American session? 0.7904 is stronger.
• 0.7684 is a strong support level.
• Current range: 0.7684 to 0.7799

Further levels in both directions:

• Below: 0.7684, 0.7582, 0.7403 and 0.7265
• Above: 0.7799, 0.7904, 0.8081, 0.8150 and 0.8214

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in short positions on Thursday. This is not consistent with the pair’s movement, as the Aussie has posted small gains. The ratio remains close to a split between long and short positions, indicative of a lack of trader bias as to what direction the AUD/USD will take next.

AUD/USD Fundamentals

• 00:00 Australian HIA New Home Sales. Actual -1.9%.
• 00:30 Australian Retail Sales. Estimate 0.3%. Actual 0.2%.
• 12:30 US Challenger Job Cuts. Actual 17.6%.
• 13:30 US Trade Balance. Estimate -38.2B. Actual -46.6B.
• 13:30 US Unemployment Claims. Estimate 287K. Actual 278K.
• 13:30 US Preliminary Nonfarm Productivity. Estimate 0.3%. Actual -1.8%.
• 13:30 US Preliminary Unit Labor Costs. Estimate 1.3%. Actual 2.7%.
• 15:30 US Natural Gas Storage. Estimate -119B. Actual -115B.
• 22:30 Australian AIG Construction Index.

*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.