AUD/USD – Aussie Subdued, NAB Business Confidence Softens

The Australian dollar is unchanged on Tuesday, following gains in the Monday session. Early in the North American session, AUD/USD is trading at 0.7650. In economic news, Australian NAB Business Confidence dipped in July, coming in at plus-4. Later in the day, Australia releases Westpac Consumer Sentiment. In the US, there are no major releases on the schedule. Preliminary Nonfarm Productivity disappointed with a decline of 0.5%, while Preliminary Unit Labor Costs gained 2.0%, above the estimate.

With Australia showing some soft numbers, the markets are keeping a close eye on confidence levels in the business and consumer sectors. NAB Business Confidence posted a gain of plus-4 in July, but this was lower than the June release of plus-6. Still, this indicates that business sentiment remains high. However, the Australian consumer is not sharing this optimism, according to the Westapac Consumer Sentiment survey. The indicator posted a sharp drop of 3.0% in July and has managed just two gains in 2016. Will we see some improvement in the August report? On the employment front, recent indicators have fallen short of expectations. On Monday, ANZ Job Advertisements declined 0.8% after two monthly gains. Australia added 7.9 thousand jobs in July, but this missed expectations and marked a three-month low. As well, the unemployment rate edged up from 5.7% to 5.8%. The RBA is closely following inflation and employment data, and if these indicators fail to improve, the bank could cut rates again before the end of 2016.

Is the US economy back on track? US employment numbers sparkled on Friday, led by Nonfarm Employment Change. The July report surprised the markets with a huge gain of 255 thousand, crushing the estimate of 180 thousand. This release follows the outstanding June reading of 280 thousand. US wage growth has been a soft spot in the robust labor market, but there was positive news as Average Hourly Earnings gained 0.3%, edging above the forecast of 0.2%. As well, Unemployment Claims remained steady at 4.9%. What will the Federal Reserve do with these numbers? Prior to the payrolls release, a September hike was virtually off the table, especially in light of the soft US GDP report in late July. The Fed has made no secret of the fact that any rate move will be data-dependent, and the stellar job numbers will force to Fed to give serious thought to a move in September. US employment and inflation releases in the next few weeks will be critical factors in determining if the Fed makes a move next month, or revisits rates in December.

AUD/USD Fundamentals

Monday (August 8)

• 21:30 Australian NAB Business Confidence. Actual plus-4

Tuesday (August 9)

• 6:00 US NFIB Small Business Index. Estimate 94.5. Actual 94.6
• 8:30 US Preliminary Nonfarm Productivity. Estimate +0.5%. Actual -0.5%
• 8:30 US Preliminary Unit Labor Costs. Estimate 1.8%. Actual 2.0%
• 10:00 US IBD/TIPP Economic Optimism. Estimate 46.2
• 10:00 US Wholesale Inventories. Estimate 0.0%
• 20:30 Australian Westpac Consumer Sentiment
• 21:30 Australian Home Loans. Estimate 2.4%
• 23:05 RBA Governor Glenn Stevens Speaks

*Key releases are highlighted in bold

*All release times are EDT

AUD/USD for Tuesday, August 9, 2016

AUD/USD August 9 at 9:40 EDT

Open: 0.7660 High: 0.7674 Low: 0.7619 Close: 0.7665

AUD/USD Technical

• AUD/USD posted losses in the Asian session but recovered in European trade. The pair is unchanged early in the North American session
• 0.7560 is providing support
• There is weak resistance at 0.7701
• Current range: 0.7560 to 0.7701

Further levels in both directions:

• Below: 0.7560, 0.7440, 0.7339 and 0.7251
• Above: 0.7701, 0.7835 and 0.7938

OANDA’s Open Positions Ratio

AUD/USD ratio has shown movement towards short positions. Currently, short positions have a slight majority (54%), indicative of trader bias towards the pair breaking out and losing ground.

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.