AUD/USD – Aussie Gains As US Manufacturing Data Disappoints

The Australian dollar continues to move higher against the US currency, continuing the upward trend we saw on Friday. Taking a look at economic news, the US ended last week on a sour note, as UoM Consumer Sentiment dropped to a five-month low. Monday didn’t bring any relief, as the important Empire State Manufacturing Index dropped to a four-month low. The dollar also responded negatively to news that Lawrence Summers has withdrawn his nomination to replace Federal Reserve head Bernard Bernanke. There are no Australian events on Monday, but the markets will be keeping a close eye on the RBA Monetary Policy Meeting Minutes, which will be released early on Tuesday.

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%. The Aussie lost ground on Thursday, but has looked very sharp since the start of September, when the currency was struggling at the 0.89 line.

US releases have run into some turbulence, and UoM Consumer Sentiment looked awful on Friday. The key indicator dropped from 80.0 points in July to 76.8 in August, its lowest level since March. This weak figure comes on the heels of weak US retail sales releases on Thursday. This week did not get off to a good start, as  Empire State Manufacturing Index slumped to 6.3 points in July, down from 8.2 points last month. The markets had expected a much stronger reading, with an estimate of 9.2 points. The markets are hoping that the US can get back on track on Tuesday ,with the release of Core CPI, a key event.

Bernard Bernanke will step down as head of the US Federal Reserve at the end of January, and the race to replace Bernanke has taken a dramatic twist. Former Treasury Secretary Lawrence Summers was considered the leading contender for the prestigious position. Surprisingly, Summers has withdrawn his nomination, leaving Vice Chairman Janet Yellen as the favored candidate. Yellen is considered dovish and may be hesitant when it comes to QE tapering. The dollar responded to the news of Summers’ withdrawal by losing ground against the major currencies.

AUD/USD for Monday, September 16, 2013

AUD/USD September 16 at 13:50 GMT

AUD/USD 0.9362 H: 0.9387 L: 0.9321

AUD/USD Technical

• AUD/USD continues to post gains in Monday trading. The pair touched a high of 0.9387 in the European session, as the 94 line is within striking distance.
• The pair is facing resistance at the round number of 0.9400. This line  could be tested if the pair continues to gain ground. This is followed by resistance at 0.9508. This line has remained in place since June.
• On the downside, the pair is receiving weak support at 0.9328. This is followed by stronger support at 0.9221.
• Current range: 0.9328 to 0.9400

Further levels in both directions:

• Below: 0.9328, 0.9221, 0.9135, 0.9089 and 0.9000
• Above: 0.9400, 0.9508, 0.9613 and 0.9700

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to movement towards long positions in Monday trading. This is reflective of what we are currently seeing from the pair, as the Aussie continues to point higher. Long positions retain a sizeable majority, indicative of strong trader sentiment towards the pair continuing to move to higher ground.

The Australian dollar continues to look sharp, and has gained over four cents against the greenback in September. With no major US releases out of the US on Monday, we could see the pair settle down during the North American session.

AUD/USD Fundamentals

• 12:30 US Empire State Manufacturing Index. Estimate 9.2 points. Actual 6.3 points.
• 13:15 US Capacity Utilization Rate. Estimate 77.8%. Actual 77.8%.
• 13:15 US Industrial Production. Estimate 0.5%. Actual 0.4%.

*Key releases are highlighted in bold

*All release times are GMT

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.