AUD/USD – Aussie Dragged Down by Weak Australian Employment Change

AUD/USD has posted losses in Thursday trading. The pair has dropped to the mid-0.92 line early in the North American session. The Aussie lost ground after Australian Employment Change posted its worst showing in five months. In the US Unemployment Claims were down sharply.

Australian releases have been positive recently, but Employment Change failed to keep pace on Thursday. The key indicator declined for the second straight month, with a reading of -10.8K in August. This shocked the markets, which had expected a strong gain of 10.2 thousand. The Unemployment Rate edged higher, from 5.7% to 5.8%. In the US, it was the opposite story as Unemployment Claims fell to just 292 thousand in August, down from 323 thousand the previous month.

The Syrian crisis has taken on a new twist, as US military action, which seemed a foregone conclusion in late August, is currently on the backburner. The US and Russia are spearheading intensive efforts to come up with a diplomatic solution to the crisis. Under the proposed plan, Syria would hand over its entire arsenal of chemical weapons to the international community to be destroyed. Speaking on US television earlier in the week, President Obama said that he would delay any military action as long as a diplomatic solution was possible, but that a strike against Syria was still on the table. If the diplomatic efforts gain momentum and the crisis eases, we could see the safe-haven dollar lose ground.

When will the Fed press the QE tapering trigger? With mixed employment numbers coming out of the US, it remains unclear what the Fed is planning to do. Unemployment Claims looked very sharp on Thursday but other employment releases have not been as strong. Tuesday’s JOLTS Job Openings looked weak, coming in at 3.69 million, way off the estimate of 3.96 million. Last week’s Non-Farm Payrolls came in at 169 thousand, missing the estimate of 178 thousand. The Unemployment Rate dropped from 7.4% to 7.3%, but this improvement is not all that significant, given the low participation rate in the labor force. There has been talk of the Fed reducing QE as early as September, but we’re unlikely to see any action if US employment numbers don’t improve. Chicago Fed President Charles Evans has hinted that we could see some action on this front from the Fed before the end of the year.

AUD/USD for Thursday, September 12, 2013

AUD/USD September 12 at 13:20 GMT

AUD/USD 0.9248 H: 0.9254 L: 0.9228

AUD/USD Technical

• AUD/USD has posted losses in Thursday trading. The pair crashed below the 0.93 in the Asian session and has continued to lose ground.
• The pair continues to face resistance at 0.9328. This line has some breathing room as the pair trades at lower levels. This is followed by resistance at the round number of 0.94. This line has remained in place since mid-June.
• On the downside, the pair is receiving support at 0.9221. This is a weak line which could be tested if the Aussie continues to lose ground. This is followed by stronger support at 0.9135.
• Current range: 0.9221 to 0.9328

Further levels in both directions:

• Below: 0.9221, 0.9135, 0.9089, 0.9000, 0.8926 and 0.8848
• Above: 0.9328, 0.9400, 0.9508 and 0.9613

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to movement towards short positions in Thursday trading. This is reflective of what we are currently seeing from the pair, as the Australian dollar has lost ground against the US currency. We have seen a significant shift in September in favor of short positions, due to the sharp rise of the Australian dollar. However, long positions still command a sizeable majority of the open positions, indicating a bias towards the Australian dollar resuming its upward movement.

The Australian dollar has looked very sharp, but has reversed direction on Thursday, coughing up close to one cent against the greenback. With the US posting a very strong Unemployment Claims, there is room for AUD/USD to lose more ground during the day.

AUD/USD Fundamentals

• 1:00 Australian MI Inflation Expectations. Actual 1.5%.
• 1:30 Australian Employment Change. Estimate 10.2K. Actual -10.8K.
• 1:30 Australian Unemployment Rate. Estimate 5.8%. Actual 5.8%.
• 12:30 US Unemployment Claims. Estimate 332K. Actual 292K.
• 12:30 US Import Prices. Estimate 0.6%. Actual 0.0%.
• 13:00 FOMC Member William Dudley Speaks.
• 14:30 US Natural Gas Storage. Estimate 65B.
• 17:00 US 30-year Bond Auction.

*Key releases are highlighted in bold

*All release times are GMT

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