AUD/USD – Aussie Firm Despite Weak Housing Data

AUD/USD has edged higher on Tuesday, as the pair trades in the high-0.93 range early in the North American session. In economic releases, Australian Housing Price Index and Home Loans both softened in April. As well, the government released its first annual budget. In the US, Core Retail Sales and Retail Sales missed expectations.

Australian housing numbers were a disappointment, as the HPI and Home Loans were weak. HPI dropped to 1.7%, down sharply from 3.4% a month earlier. This was well below the estimate of 3.0%. Home Loans posted its first decline in three months, coming in at -0.9%. The estimate stood at -0.1%. Despite, the weak numbers, the Aussie remains at high levels, trading close to the 0.94 line.

The Australian government released its first annual budget on Tuesday, introducing austerity measures in order to reduce the country’s debt. The government said that the cost-cutting measures will reduce the national debt of $49.9 billion to $29.8 billion by June 2015. The austerity budget will likely slow economic growth, which could have a negative impact on the Australian dollar.

US Retail Sales and Core Retail Sales are key gauges of consumer spending, and are carefully tracked by the markets. Both indicators were weak in April. Core Retail Sales dropped to 0.0%, well off the estimate of 0.6%. Retail Sales followed suit, with a paltry gain of just 0.1%, compared to an estimate of 0.5%. The weak numbers could weigh on the US dollar, which has coughed up about 100 points to the Aussie in less than a week.

Strong Australian employment data in April helped lift the Australian dollar last week. Employment Change dropped to 14.2 thousand last month, but this easily beat the estimate of 7.5 thousand. The unemployment rate remained at 5.8%, better than the estimate of 5.9%. As well, the RBA continued its low-rate monetary policy, as it maintained rates at 2.50%. Although RBA Governor Glenn Stevens remarked that the Australian dollar remains high by “historical standards”, the Aussie continues to trade at high levels. The RBA has been reluctant to lower rates in order to weaken the currency, and attempts by the central bank to “talk down” the currency have proven ineffective.

AUD/USD for Tuesday, May 13, 2014

AUD/USD May 12 at 14:10 GMT

AUD/USD 0.9374 H: 0.9382 L: 0.9333

AUD/USD Technical

• AUD/USD has edged higher on Tuesday.
• 0.9361 continues in a support role. This is a weak line and could see pressure during the day. This is followed by support at 0.9229.
• On the upside, 0.9446 is the next line of resistance.
• Current range: 0.9361 to 0.9446.

Further levels in both directions:

• Below: 0.9361, 0.9229, 0.9119, 0.9000 and 0.8893
• Above: 0.9446, 0.9542, 0.9617 and 0.9703

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in short positions in Tuesday trading, reversing the direction seen a day earlier. This is not consistent with the movement of the pair, as the Australian dollar has posted slight gains. The ratio has a majority of long positions, indicative of trader bias towards the Australian dollar continuing its upward movement.

AUD/USD continues to trade close to the 0.94 level. The pair is steady in the North American session.

AUD/USD Fundamentals

• 1:30 Australian HPI. Estimate 3.0%. Actual 1.7%.
• 1:30 Australian Home Loans. Estimate-0.1%. Actual -0.9%.
• 9:30 Australian Annual Budget Release.
• 11:30 US NFIB Small Business Index. Estimate 94.6 points. Actual 95.2 points.
• 12:30 US Core Retail Sales. Estimate 0.6%. Actual 0.0%
• 12:30 US Retail Sales. Estimate 0.5%. Actual 0.1%.
• 12:30 US Import Prices. Estimate +0.4%. Actual -0.4%.
• 14:00 US Business Inventories. Estimate 0.4%. Actual 0.4%.

*Key releases are highlighted in bold

*All release times are GMT

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