AUD/USD – Aussie Steady at 72, Australian Capital Spending Impresses

The Australian dollar is steady on Thursday, as the pair trades at the 0.72 line in the European session. On the release front, Australian Private Capital Expenditure posted a respectable gain of 0.8%.  Later in the day, the US releases two key events – Core Durable Goods Orders and Unemployment Claims. Core Durable Goods Orders is expected to improve to 0.2%, while Unemployment Claims is forecast to jump up to 271 thousand.

There was good news out of Australia, as Private Capital Expenditure posted a gain of 0.8% in the fourth quarter. This ended a nasty streak of four straight declines and surprised the markets, which had expected a sharp decline of 3.1%. Although the fourth quarter looked solid, capital spending is expected to drop in 2016/2017, reflective of the downturn in the mining industry. The weaker prognosis has raised concerns that the RBA could reduce interest rates next week, a move that would almost certainly weaken the Australian currency.

US fundamentals have softened in the early part of 2016, and the American consumer has become less optimistic about the economy as a result. This was underscored by CB Consumer Confidence, which slid to 92.2 points in February, well off the forecast of 97.4 points. This marked a three-month low for the key indicator. Weaker consumer confidence could well translate into a decrease in consumer spending, a key driver of economic growth. Meanwhile, the US manufacturing sector continues to struggle. Recent manufacturing reports have pointed to contraction in the sector, and this was again the case with the Richmond Manufacturing report, which slipped to -4 points in February, short of the forecast of +2 points. This was the indicator’s worst reading since September 2015. On Thursday, the US releases Core Durable Goods Orders, a key manufacturing indicator. The indicator has posted two straight declines, and the estimate for the January report stands at 0.2%. A soft reading could send the US dollar downwards.

AUD/USD Fundamentals

Wednesday (Feb. 24)

• 19:30 Australian Private Capital Expenditure. Estimate -3.1%. Actual 0.8%

Thursday (Feb. 25)

• 8:30 US Unemployment Claims. Estimate 271K
• 8:30 US Durable Goods Orders. Estimate 3.0%
• 9:00 US HPI. Estimate 0.5%
• 10:30 US Natural Gas Storage. Estimate -125B

Upcoming Key Events

Friday (Feb. 26)

• 8:30 US Preliminary GDP. Estimate 0.4%

*Key releases are highlighted in bold

*All release times are EST

AUD/USD for Thursday, February 25, 2016

AUD/USD February 25 at 7:55 EST

AUD/USD  Open: 0.7191 Low: 0.7154  High: 0.7214 Close: 0.7206

AUD/USD Technical

• 0.7213 is under strong pressure as a resistance line.
• The round number of 0.71 is providing strong support
• Current range: 0.7100 to 0.7213

Further levels in both directions:

• Below: 0.7100, 0.7012 and 0.6931
• Above: 0.7213, 0.7385, 7440 and 0.7533

OANDA’s Open Positions Ratio

AUD/USD ratio has shown movement towards long positions, which currently are a majority (55%). This is indicative of trader bias towards AUD/USD moving upwards.

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.