AUD/USD – Aussie Drifting, US Jobless Claims Jumps

The Australian dollar is showing limited movement on Thursday, continuing the lack of movement which marked the Wednesday session. AUD/USD is trading at 0.7350 in the North American session. On the release front, Australian Inflation Expectations dropped to 3.2%. In the US, Unemployment Claims jumped to 294 thousand, well above the estimate of 277 thousand.  As well, three FOMC members will make public appearances during the day. Friday is a data-heavy day, with the US publishing retail sales, inflation and consumer confidence reports.

There was positive news out of Australia on Tuesday, although the Aussie failed to take advantage and didn’t gain any ground. Consumer Sentiment surged in May with a gain of 8.5%. The indicator had been struggling, posting three releases in four months. Stronger consumer confidence often translates into increased consumer spending, a critical driver of economic growth. The RBA will release the minutes of its most recent policy meeting on Monday and the markets will be looking for clues as to the timing of another rate cut. The central bank surprised with a rate cut last week, lowering rates from 2.00% to 1.75%. With a national election scheduled for July 2, the RBA is unlikely to make any monetary moves until August. If inflation levels don’t improve soon, the likelihood will increase that the RBA will step in with another rate cut in the summer.

It continues to be one step forward, one step backward for US job numbers. Unemployment Claims, which have been moving higher, surged last week, hitting 294 thousand. This was the highest weekly claims level since July 2015. On Tuesday, JOLT Job Openings looked sharp in April, jumping to 5.76 million. This figure was much stronger than the estimate of 5.56 million. However, last week’s host of employment numbers were a mix, which predictably has raised concerns about the strength of the US labor market. Last week, Nonfarm Payrolls looked awful, as the key indicator slid to just 160 thousand, well short of the forecast of 203 thousand. This marked the lowest reading in seven months. ADP Nonfarm Payrolls and Unemployment Claims both missed their estimates. On a brighter note, wages showed growth, as Average Hourly Earnings posted a second straight gain of 0.3%.

The markets are busy looking for clues as to what the Federal Reserve has planned next. In its April policy statement, the Fed stayed on the sidelines, but the message to the markets with regard to the US economy was one of cautious optimism. The statement noted continuing improvement in the labor market but added that it was keeping a watchful eye on low inflation levels. The Fed statement appeared to leave the open to a June rate hike, but last week’s soft payrolls report has put a damper on speculation about an imminent hike. Last week, New York Fed president William Dudley said he remains confident that the Fed could raise rates as much as twice this year, but many analysts are skeptical if the Fed will raise rates before 2017. The minutes of the April Fed meeting will be released next week, and any clues about a June hike could send the dollar higher against its rivals. Upcoming data, especially employment and inflation indicators, will be major factors as the Fed must decide whether to press the rate trigger in June.

AUD/USD Fundamentals

Thursday (May 12)

• 8:30 US Unemployment Claims. Estimate 277K. Actual 294K
• 8:30 US Import Prices. Estimate 0.6%. Actual 0.3%
• 10:30 US Natural Gas Storage. Estimate 60B
• 11:00 US FOMC Member Loretta Mester Speaks
• 11:45 US FOMC Member Eric Rosengren Speaks
• 13:01 US 30-year Bond Auction
• 13:30 US Member Esther George Speaks

Upcoming Key Events

Friday (May 13)

• 8:30 US Core Retail Sales. Estimate 0.3%
• 8:30 US PPI. Estimate 0.3%
• 8:30 US Retail Sales. Estimate -0.3%
• 10:00 US Preliminary UoM Consumer Sentiment. Estimate 89.9 points

*Key releases are highlighted in bold

*All release times are EDT

AUD/USD for Thursday, May 12, 2016

AUD/USD May 12 at 10:10 EDT

Open: 0.7354 Low: 0.7312 High: 0.7373 Close: 0.7348

AUD/USD Technical

• AUD/USD has shown limited movement in the Thursday session
• 0.7472 is a strong resistance line
• 0.7339 is providing weak support and was tested earlier on Thursday. It could break in the North American session
• Current range: 0.7339 to 0.7472

Further levels in both directions:

• Below: 0.7339, 0.7251, 0.7160 and 0.7049
• Above: 0.7472, 0.7560 and 0.7678

OANDA’s Open Positions Ratio

AUD/USD ratio is almost unchanged on Thursday, consistent with the lack of movement from the pair. Long positions have a majority (58%), indicative of trader bias towards AUD/USD breaking out and moving higher.

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.