AUD/USD – Aussie Jumps on Australian Employment Numbers

AUD/USD has posted strong gains on Thursday, as the pair knocks on the door of the 0.94 line in the North American session. The Aussie climbed courtesy of the Australian Employment Change, which easily beat the estimate in April. In the US, Unemployment Claims looked sharp, dropping to a three-week low. In Washington, Federal Reserve chair Janet Yellen testifies before the Senate Budget Committee.

Strong Australian employment data last month helped lift the Australian dollar on Wednesday. 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%. Earlier in the week, 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 posted gains. The RBA has been reluctant to lower rates in order to weaken the Aussie, and attempts by the central bank to “talk down” the currency have been ineffective, as the Australian dollar continues to trade at high levels.

US Unemployment Claims rebounded nicely last week, as the key indicator dipped to 319 thousand. This beat the estimate of 328 thousand. The reading follows last week’s excellent Nonfarm Payrolls and Unemployment Claims, as the US employment picture appears to have brightened. If employment numbers continue to improve, we can expect the Fed to continue tapering its QE scheme.

Federal Reserve Chair testified before Congress’ Economic Joint Committee on Wednesday, and gave a cautious thumbs-up to the economic recovery. She said that the economy has improved, but pointed to two sore spots – the job market remains weak and inflation is below the Fed’s target of 2%. Yellen stated that she therefore expects that low interest rate levels will continue for a “considerable time”. Yellen has stated previously that slack remains in the economy, and the Fed is expected to proceed carefully with future trims to its QE scheme. Since December, the Fed has trimmed the asset-purchase program by almost half, cutting it to $45 billion each month.

AUD/USD for Thursday, May 8, 2014

AUD/USD May 8 at 13:25 GMT

AUD/USD 0.9386 H: 0.9394 L: 0.9320

AUD/USD Technical

• AUD/USD has posted strong gains on Thursday, as the pair trades close to the 0.94 line.
• 0.9361 has switched to a support role as the pair trades at higher levels.
• 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 Thursday trading, continuing the direction seen a day earlier. This is not consistent with the movement of the pair, as the Australian dollar has posted strong gains. The ratio has a majority of long positions, indicative of trader bias towards the Australian dollar continuing its upward movement.

AUD/USD has pushed higher on Thursday. Will the pair cross above the 0.94 in the North American session?

AUD/USD Fundamentals

• 1:30 Australian Employment Change. Estimate 7.5K. Actual 14.2K.
• 1:30 Australian Unemployment Rate. Estimate 5.9%. Actual 5.8%.
• 12:30 US Unemployment Claims. Estimate 328K. Actual 319K.
• 13:30 US Federal Reserve Chair Janet Yellen Testifies Before Senate Budget Committee.
• 13:30 US FOMC Member Daniel Tarullo Speaks.
• 14:30 US Natural Gas Storage. Estimate 71B.
• 17:01 US 30-year Bond Auction.

*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.