AUD/USD – Aussie Drifting in Light Holiday Trade

The Australian dollar is showing little movement on Wednesday, as AUD/USD trades at 0.7050 in the North American session. Wednesday is a very quiet day on the economic front, with no releases out of Australia or the US.  On Thursday, we could see more movement on the markets, with several key events on the calendar. Australia will release Employment Change and the unemployment rate. In the US, we’ll get a look at Unemployment Claims. As well, Federal Reserve head Janet Yellen speaks at event in Washington.

On Tuesday, Australian numbers were a mix. NAB Business Confidence slipped to 2 points. This was well off the estimate of 5 points a month earlier, and points to weakness in business sentiment. This is a closely-watched indicator, as weaker business confidence often translates into decreased hiring and spending, which in turn can have a negative ripple effect throughout the economy. Home Loans softened to 2.0%, but this was still much better than the estimate of 0.1%. Westpac Consumer Sentiment posted a strong gain of 3.9%, shy of last month’s reading of 4.2%.

Australian dollar watchers are keeping a close eye on this week’s key Chinese numbers, as the Asian giant is Australia’s number one trading partner. This week’s readings have not been reassuring. CPI dropped to 1.3% in October, short of the estimate of 1.5% and the lowest reading in five months. Industrial Production edged lower to 5.6%, missing the forecast of 5.8%. Is the Chinese slowdown getting worse? If so, the struggling Aussie could be headed below the 0.70 symbolic level.

The US dollar posted broad gains late last week, courtesy of the superb NFP reading which exceeded all expectations. In the process, the likelihood of a December rate hike by the Federal Reserve has risen. Still, traders should keep in mind that the Fed has been split over a rate hike, and many members will be hesitant to vote in favor of raising rates unless they are confident that the US economy can withstand an interest rate hike. Employment numbers out of the US have certainly improved, with recent indicators such as the unemployment rate pointing to close to full employment in the US economy. At the same time, other indicators have not fared as well, particularly manufacturing data and inflation levels. While a rate hike in December is again on the table, it is by no means a done deal, and will make for plenty of speculation on the part of markets players over the next several weeks.

With the stellar performance by US Nonfarm Payrolls, the markets will be looking for more good news from US employment numbers. Strong job numbers not only point to a solid US economy, but will increase the likelihood of a rate increase in December, an event which would likely send the greenback to higher levels against its rivals. We’ll get a look at unemployment claims on Thursday, with the key indicator expected to drop to 270 thousand. Although last week’s reading of 276 thousand was higher than expected, the four-week indicator, which is less volatile than the weekly measurement, remains at its lowest level since December 1973. A strong reading from unemployment claims could bolster the US dollar.

AUD/USD Fundamentals

Wednesday (Nov. 11)

• There are no releases on Wednesday

Upcoming Key Releases

Thursday (Nov. 12)

• 00:30 Australian Employment Change. Estimate 14.8 thousand
• 00:00 Australian Unemployment Rate. Estimate 6.2%
• 13:30 US Unemployment Claims. Estimate 270K
• 14:30 Federal Reserve Chair Janet Yellen Speaks

*Key releases are highlighted in bold

*All release times are GMT

AUD/USD for Wednesday, November 11, 2015

AUD/USD November 11 at 16:15 GMT

AUD/USD 0.7053 H: 0.7078 L: 0.7039

AUD/USD Technical

• AUD/USD posted slight gains in the Asian session, and has posted marginal movement in the European and North American sessions. This is the same pattern that marked the pair on Tuesday.
• The round number of 0.700 remains a weak support level.
• On the upside, 0.7063 was tested earlier and remains under strong pressure.
• Current range: 0.7000 to 0.7063

Further levels in both directions:

• Below: 0.7000, 0.6931 and 0.6801
• Above: 0.7063, 0.7100, 0.7213 and 0.7440

OANDA’s Open Positions Ratio

AUD/USD ratio is unchanged, reflecting the lack of movement we are seeing from the pair. Long positions have a strong majority (59%), which is 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.