AUD/USD – Aussie Jumps to 14-week High on Strong Aussie Consumer Sentiment

The Australian dollar has posted strong gains on Wednesday and climbed above the 0.77 level. In the North American session, AUD/USD is trading at 0.7740. The Aussie received a boost as Westpac Consumer Sentiment climbed 2.0%. Australian Home Loans gained 1.2%, but this was short of expectations. Later in the day, we’ll get a look at MI Inflation Expectations. Over in the US, JOLTS Jobs Openings improved to 5.62 million, easily beating expectations. Thursday’s key event is US Unemployment Claims.

The Australian dollar has flexed some muscle on Wednesday, as AUD/USD has reached its highest level since late April. The Aussie climbed after a solid Westpac Consumer Sentiment report. The indicator rebounded after two straight declines, posting a gain of 2.0% in August. Earlier in the week, NAB Business Confidence posted a gain of plus-4 in July, which was lower than the June release of plus-6. Still, this indicates that business sentiment remains high. Solid confidence levels in the business and consumer sectors are important since strong confidence levels often translate into increased spending by consumers and the private sector.

US employment numbers impressed in July, led by a banner Nonfarm Payrolls report. The July indicator surprised the markets with a huge gain of 255 thousand, crushing the estimate of 180 thousand. This release follows the outstanding June reading of 280 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%. What will the Federal Reserve do with these numbers? Prior to the payrolls release, a September hike was virtually off the table, especially in light of the soft US GDP report in late July. The Fed has made no secret of the fact that any rate move will be data-dependent, and the stellar job numbers will force to Fed to give serious thought to a move in September. Employment and inflation releases in the next few weeks will be critical factors in determining if the Fed makes a move next month, or waits until December before revisiting the rate question.

AUD/USD Fundamentals

Tuesday (August 9)

• 20:30 Australian Westpac Consumer Sentiment. Actual 2.0%
• 21:30 Australian Home Loans. Estimate 2.4%. Actual 1.2%

Wednesday (August 10)

• 10:00 US JOLTS Job Openings. Estimate 5.52M. Actual 5.62M
• 10:30 US Crude Oil Inventories. Estimate -1.3M
• 13:01 US 10-year Bond Auction
• 14:00 US Federal Budget Balance. Estimate -119.0B
• 21:00 Australian MI Inflation Expectations

Upcoming Key Events

Thursday (August 11)

• 8:30 US Unemployment Claims. Estimate 272K

*Key releases are highlighted in bold

*All release times are EDT

AUD/USD for Wednesday, August 10, 2016

AUD/USD August 10 at 10:20 EDT

Open: 0.7662 High: 0.7755 Low: 0.7662 Close: 0.7731

AUD/USD Technical

• AUD/USD posted gains in the Asian and European sessions. The pair has dropped slightly in North American trade
• There is resistance at 0.7835
• 0.7701 has switched to a support level following strong gains by AUD/USD. This line is fluid and could see further action in the North American session
• Current range: 0.7701 to 0.7835

Further levels in both directions:

• Below: 0.7701, 0.7560, 0.7440 and 0.7339
• Above: 0.7835, 0.7938 and 0.8045

OANDA’s Open Positions Ratio

AUD/USD ratio is unchanged on Wednesday. Short positions have a majority (55%), indicative of trader bias towards the pair reversing directions and losing ground.

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.