AUD/USD – Aussie Struggling Close to 70 Level

The Australian dollar is unchanged on Monday, as AUD/USD trades at 0.7050 in the North American session. In economic news, it was a quiet start to the week, with only one US event on the schedule. Labor Market Conditions Index came in at 1.6 points. In Australia, ANZ Job Advertisements posted a small gain of 0.4%. On Tuesday, we’ll get a look at Australian NAB Business Confidence, a key event which could have s strong impact on the movement of AUD/USD.

All eyes were on US Nonfarm Payrolls on Friday, and the key indicator did not disappoint, posting an excellent reading. The key indicator jumped to 271 thousand, crushing the forecast of 181 thousand. It was the indicator’s best showing since May. The Australian dollar dropped sharply due to the NFP release, losing over 100 points on Friday. As well, US hourly wages were up 0.4%, bringing the annual increase to 2.5%, and the unemployment rate dipped to 5.0%. These excellent readings are further signs that the US economy is close to full employment. The positive news continued on Monday, as the Labor Market Conditions Index gained 1.6 points in October, up from a flat reading of 0.0 points a month earlier.

Given that the Federal Reserve said in its recent policy statement that it employment data would be an important factor in a rate decision, the strong NFP reading has greatly increased the likelihood of a Fed hike. The US dollar posted broad gains as a result, and oil prices dropped for a third straight day on Friday. Still, a Fed rate hike should not be considered a done deal, as not all US releases have been as strong as employment data, such as manufacturing and inflation numbers. Low inflation points to slack in the economy, and the Fed policymakers will need to be assured that the US economy can withstand an interest rate hike before voting in favor of raising rates.

The Aussie is sensitive to Chinese key releases, as the Asian giant is Australia’s number one trading partner. The Chinese trade surplus rose a third straight month, hitting 393 billion yuan in October, well above the forecast of 367 billion yuan. The higher trade surplus was a result of a decrease in imports, underscoring weaker Chinese demand for Australian resources, which has meant serious trouble for the Australian export industry. We’ll get a look at Chinese CPI early on Tuesday, followed by Industrial Production on Wednesday.

AUD/USD Fundamentals

Monday (Nov. 9)

• 15:00 US Labor Market Conditions Index

Upcoming Key Events

Tuesday (Nov. 10)

• 00:30 Australian NAB Business Confidence

*Key releases are highlighted in bold

*All release times are GMT

AUD/USD for Monday, November 9, 2015

AUD/USD November 9 at 16:05 GMT

AUD/USD 0.7146 H: 0.7170 L: 0.7153

AUD/USD Technical

• AUD/USD posted slight gains in the Asian session, and has posted marginal movement in the European and North American session.
• The round number of 0.71 remains a weak support level.
• 0.7213 is an immediate resistance line.
• Current range: 0.7100 to 0.7213

Further levels in both directions:

• Below: 0.7100, 0.7060 and 0.70
• Above: 0.7213, 0.7440, 0.7664 and 0.7770

OANDA’s Open Positions Ratio

AUD/USD ratio is showing movement towards short positions. Long positions continue to have a majority (55%), indicative of trader bias in favor of the Australian dollar moving to higher levels.

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.