AUD/USD – Aussie Quiet, Markets Eye Australian GDP

The Australian dollar continues to have an uneventful week, as AUD/USD trades at 0.7150 in Tuesday’s North American session. On the release front, Australian Building Approvals posted a sharp drop of 7.5%, well below expectations. As expected, the RBA held interest rates at 2.00%. Later on Tuesday, we’ll get a look at Australian GDP. In the US, ISM Manufacturing PMI came in at 49.5 points, within expectations. There are two key releases on Wednesday – US ADP Non-Farm Employment Change and Australian Trade Balance.

Australian Building Approvals tends to show strong fluctuation from month to month, and this was the case in the January release, which plunged 7.5%, compared to a gain of 9.2% in the previous reading. This was much worse than the estimate of a decline of 2.9%. Meanwhile, there were no surprises from the RBA, which held the benchmark rate at the round number of 2.00%. The RBA statement was optimistic but cautious in tone, noting that there was “reasonable prospects for continued growth” and that the employment picture had shown improvement. Will the RBA lower rates in 2016? The central bank continues to maintain its easing bias, and analysts believe that we will see at least one rate cut this year.

The US economy has shown signs of softness in early 2016, and January reports from the housing sector are raising concerns. Housing Starts and Building Applications fell in January, and New Home Sales and Pending Sales followed suit, missing expectations. Activity in the housing sector is closely monitored by analysts, as a decrease in home building can have a negative impact on other sectors of the economy. The US manufacturing sector has also struggled, although recent durable goods order were much stronger than expected. The markets will next shift focus to the employment front, starting with the ADP Nonfarm Payrolls. The estimate stands at 185 thousand, much lower than the previous release of 205 thousand.

AUD/USD Fundamentals

Monday (Feb. 29)

• 19:30 Australian Building Approvals. Estimate -2.9%. Actual -7.5%
• 19:30 Australian Current Account. Estimate -19.8B. Estimate -21.1B
• 22:30 Australian Cash Rate. Estimate 2.00%
• 22:00 RBA Rate Statement

Tuesday (March 1)

• 00:30 Australian Commodity Prices. Actual -21.6%
• 9:45 US Final Manufacturing PMI. Estimate 51.0 points. Actual 51.3 points
• 10:00 US ISM Manufacturing PMI. Estimate 48.5 points. Actual 49.5 points
• 10:00 US Construction Spending. Estimate 0.5%. Actual 1.5%
• 10:00 US ISM Manufacturing Prices. Estimate 35.5 points. Actual 38.5 points
• 10:00 US IBD/TIPP Economic Optimism. Actual 46.8 points
• All Day – US Total Vehicles. Estimate 17.6M
• 19:00 Australian GDP. Estimate 0.5%

Upcoming Key Events

Wednesday (March 2)

• 8:15 US ADP Non-Farm Employment Change. Estimate 185K
• 19:30 Australian Trade Balance. Estimate -3.22B

*Key releases are highlighted in bold

*All release times are EST

AUD/USD for Tuesday, March 1, 2016

AUD/USD March 1 at 11:05 EST

AUD/USD  Open: 0.7139 Low: 0.7105  High: 0.7192 Close: 0.7149

AUD/USD Technical

• There is resistance at 0.7213
• The round number of 0.71 is a weak support line
• 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

The AUD/USD ratio is unchanged, consistent with the lack of movement from AUD/USD. Long positions have a slight majority (54%), which is indicative of trader bias towards AUD/USD continuing to move 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.