AUD/USD – Aussie Holds Own Despite Weak Australian Job Numbers

Australian dollar is unchanged on Thursday, as the pair trades at 0.7338 in the North American session. AUD/USD gained about 100 points on Wednesday, taking advantage of a broadly-weaker US dollar. Taking a look at economic releases, Australian Employment Change was a big disappointment, posting a reading of -5.1 thousand. Over in the US, CPI came in at -0.2%, matching expectations. Core CPI was stronger, with an slight gain of 0.2%. Unemployment Claims surprised with a strong improvement, dipping to 255 thousand, compared to a forecast of 269 thousand. The Empire State Manufacturing Index continues to struggle, posting a gain of -11.4 points, weaker than the forecast of -7.3 points. Traders should keep a close eye on Friday’s key releases out of the US, Consumer Sentiment and JOLTS Jobs Openings.

Australian job numbers were dismal, as Employment Change posted its first decline in five months. The reading of -5.1 thousand surprised the markets, which had expected a gain of 7.2 thousand. The unemployment rate remained unchanged at 6.2%, matching the forecast. There is a reasonable likelihood that the RBA could cut rates within the next 6 months, and these kind of weak readings are not good news for the Australian currency, as they lead to increased speculation that a rate cut is in the cards.

Federal Reserve policymakers are strongly divided on the question of a rate hike in 2015. This was underscored on Monday by FOMC member Lael Brainard, who stated that the Fed should not raise rates before global economic conditions improve. Brainard noted that the Chinese slowdown has caused economic turmoil worldwide, and the US economy could lose steam due to weaker exports and weak global economic conditions. Clearly, Brainard is of the view that the Fed should take its time and proceed with caution. With global economic conditions unlikely to change anytime soon, a rate move may be on hold unless the US posts some key releases, such as GDP or employment numbers, which match or beat expectations.

A very different view was put forth earlier in the week by another FOMC member, Dennis Lockhart. Lockhart, considered a centrist on monetary policy, sounded more optimistic about a rate hike before the end of 2015. Lockhart did not rule out a rate hike in October, and added that the Fed would have more data to evaluate before its December policy meeting. With FOMC members sending out such conflicting messages, it is no wonder that the markets have been unable to get a handle on the timing of a rate hike, and this failure of the Fed to communicate a clear message to the Fed has hurt the US dollar, as we saw after the release of the Fed minutes last week.

AUD/USD Fundamentals

Thursday (Oct. 15)

• 12:00 Australian MI Inflation Expectations. Actual 3.5%.
• 12:30 Australian Employment Change. Estimate 7.2K. Actual -5.1K.
• 12:30 Australian Unemployment Rate. Estimate 6.2%. Actual 6.2%.
• 12:30 Australian New Motor Vehicle Sales. Actual 5.5%.
• 12:30 US CPI. Estimate -0.2%. Actual -0.2%.
• 12:30 US Core CPI. Estimate 0.1%. Actual 0.2%.
• 12:30 US Unemployment Claims. Estimate 269K. Actual 255 thousand.
• 12:30 US Empire State Manufacturing Index. Estimate -7.3 points. Actual -11.4 points.
• 14:00 US Philly Fed Manufacturing Index. Estimate -1.8 points.
• 14:30 Fed FOMC Member William Dudley Speaks.
• 14:30 US Natural Gas Storage. Estimate 92B. Actual 100B.
• 15:00 US Crude Oil Inventories. Estimate 2.2M. Actual 7.6M.
• 19:30 US Federal Budget Balance. Estimate 93.8B.

Upcoming Key Events

Friday (Oct. 16)

• 12:30 RBA Financial Stability Review. 
• 14:00 US Preliminary UoM Consumer Sentiment. Estimate 88.8 points.
•  14:00 US JOLTS Job Openings. Estimate 5.77M.

*Key releases are highlighted in bold

*All release times are GMT

AUD/USD for Thursday, October 15, 2015

USD/JPY October 14 at 18:00 GMT

USD/JPY 0.7338 H: 0.7363 L: 0.7265

AUD/USD Technical

• 0.7213 is a weak support level. The round number of 0.71 is stronger.
• 0.7440 is a strong resistance line.
• Current range: 0.7213 to 0.7440

Further levels in both directions:

• Below: 0.7213, 0.7100, 0.7060 and 0.70
• Above: 0.7440, 0.7664, 0.7770 and 0.7849

OANDA’s Open Positions Ratio

AUD/USD ratio has a solid majority of long positions (54%), indicative of trader bias towards the Australian dollar moving to higher levels.

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.