AUD/USD – Aussie Strengthens on Weak US Housing, PMI Reports

The Australian dollar has posted considerable gains on Monday, as AUD/USD trades at 0.7240 in the North American session. The Aussie took advantage of weak US numbers, as Chicago PMI and Pending Home Sales were well short of the forecast. The markets will be looking for better news from ISM Manufacturing PMI on Tuesday. In Australia, Company Operating Profits and Private Sector Credit were both within expectations. The RBA will set interest rates on Tuesday, and the markets are expecting the benchmark rate to remain at an event 2.00%. The RBA could use the Rate Statement to put in a word about the health of the Australian economy, and any negative comments from the central bank could hurt the Aussie.

It was a dismal start to the new trading week for US releases. Chicago PMI slid into contraction mode, dropping sharply from 56.2 points to 48.7 points. This was way off the estimate of 54.3 points. There was little relief from Pending Home Sales, which posted a weak gain of 0.2%, compared to the forecast of 1.6%. However, the housing indicator managed to break a string of two consecutive declines. Market attention has shifted to Tuesday’s key release, the ISM Manufacturing PMI. Recent US manufacturing numbers have been weak, so if the PMI follows suit, the Aussie could continue its upward movement.

With the US continuing to post strong job numbers, speculation has increased that the Federal Reserve will change course and raise interest rates for the first time in ten years. Unemployment Claims were down sharply last week, and even a lukewarm Nonfarm Payroll report late in the week should not present an obstacle for the Fed. However, one important factor against a rate raise is that of low inflation levels, as the Fed has noted in the past that inflation is an important factor in the rate decision process. We’ll get a look at one more round of CPI and PPI reports prior to the Fed policy meeting on December 16, and these releases could cause some volatility in the markets if they are not close to the estimates. Meanwhile, the guessing game continues, and the markets will be closely following every key release and comments from Fed members in the two weeks leading up to the critical December policy meeting.

AUD/USD Fundamentals

Monday (Nov. 30) 

• 00:30 Australian Company Operating Profits. Estimate 1.1%. Actual 1.3%
• 00:30 Australian Private Sector Credit. Estimate 0.6%. Actual 0.7%
• 22:30 Australian AIG Manufacturing Index
• 14:45 US Chicago PMI. Estimate 54.3 points. Actual 48.7 points
• 15:00 US Pending Home Sales. Estimate 1.6%. Actual 0.2%

Upcoming Key Events

Tuesday (Dec. 1) 

• 3:30 Australian Cash Rate. Estimate 2.00%
• 3:30 Australian RBA Rate Statement
• 15:00 US ISM Manufacturing PMI. Estimate 50.6 points

*Key releases are highlighted in bold

*All release times are GMT

AUD/USD for Monday, November 30, 2015

AUD/USD November 30 at 16:30 GMT

AUD/USD 0.7239 H: 0.7250 L: 0.7169

AUD/USD Technical

• AUD/USD lost ground in the Asian session but recovered. The pair has posted gains in the European and North American sessions.
• 0.7213 remains busy and has switched to a support role. It is a weak line.
• 0.7440 is a strong resistance.
• Current range: 0.7213 to 0.7440

Further levels in both directions:

• Below: 0.7213, 0.7100 and 0.7063
• Above: 0.7440, 0.7526 and 0.7644

OANDA’s Open Positions Ratio

AUD/USD ratio is showing little movement, as long and short positions are an even split. This is indicative of a lack of trader bias as to what direction the pair will take next.

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.