AUD/USD – Aussie Edges Higher, Business Confidence Next

The Australian dollar has edged higher on Monday, erasing the losses which marked the Friday session. Early in the North American session, AUD/USD is trading at 0.7650. In economic news, Australian ANZ Job Advertisements declined 0.8%. Later on Monday, we’ll get a look at NAB Business Confidence. In the US, the sole event on the schedule is the Labor Market Conditions Index. The indicator has recorded five straight declines. Will we see a move into positive territory?

The week started out on a sour note, as ANZ Job Advertisements dropped 0.8%, after two monthly gains. The indicator provides a snapshot of the labor market, which is showing signs of slack. The country 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%. Last week, Retail Sales posted a negligible gain of 0.1%, shy of the forecast of 0.4% and a 4-month low. Consumer spending has been under pressure from weak wage growth as well as very low inflation. Will the RBA’s rate cut to 1.50% be enough to boost inflation levels? The RBA published its quarterly policy statement on Friday. There were no clues regarding further rate cuts, although the many economists are projecting further cuts, saying rates could drop to as low as 1% in 2017. The statement said that inflation levels will likely remain under the 2 percent level until 2018, and cited the Australian dollar and China as two sources of uncertainty with regard to growth and inflation forecasts.

AUD/USD dropped below the 0.76 level on Friday, as the greenback posted broad gains courtesy of excellent US employment numbers. Nonfarm Employment Change, one of the most important indicators, surprised the markets with a huge gain of 255 thousand, crushing the estimate of 180 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%. These strong numbers will likely increase the odds of a September rate hike by the Federal Reserve. The Fed has made no secret of the fact that any rate move will be data-dependent, and upcoming employment and inflation reports will be critical factors in the Fed’s decision. The recent US GDP report, which was much softer than expected, had dampened speculation about a rate hike before next year, but the stellar job numbers has increased the likelihood a move by Fed before the end of the year.

AUD/USD Fundamentals

Sunday (August 7)

• 21:30 Australian ANZ Job Advertisements. Actual -0.8%

Monday (August 8)

• 10:00 US Labor Market Conditions Index
• 21:30 Australian NAB Business Confidence

*Key releases are highlighted in bold

*All release times are EDT

AUD/USD for Monday, August 8, 2016

AUD/USD August 8 at 9:50 EDT

Open: 0.7611 High: 0.7659 Low: 0.7596 Close: 0.7655

AUD/USD Technical

• AUD/USD was flat in the Asian session and posted slight gains in European trade. The pair has posted gains early in the North American session
• 0.7560 is providing support
• There is 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 is showing little movement on Monday. Long and short positions are close to an even split, indicative of a lack of trader bias as to what direction the pair will take next.

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.