AUD/USD – Aussie Posts Gains Despite Weak Building Approvals

The Australian dollar has moved higher in Monday trading. AUD/USD is trading just under the 0.88 line in the European session. In economic news, Australian Building Approvals continues to look weak and posted a decline of -2.9%. ANZ Job Advertisements and Commodity Prices also disappointed. In the US, today’s focus is on manufacturing releases, highlighted by ISM Manufacturing PMI.

Australian releases started the week on a disappointing note, as Building Approvals declined by 2.9%. This was the fourth decline in five readings, pointing to ongoing contraction in the construction industry. ANZ Job Advertisements, an important employment indicator, posted its fourth straight drop, coming in at -0.3%. There was no relief from Commodity Prices, which declined by 9.9%, a six-month low. Despite the dismal readings, the Australian dollar has moved higher on Monday.

Over in the US, last week’s Unemployment Claims disappointed, coming in above the estimate for the first time in four weeks. The key indicator rose to 348 thousand, up sharply from 326 thousand a week earlier. This was higher than the estimate of 331 thousand. The news was even worse from Pending Home Sales. The key indicator plunged 8.3%, its sharpest drop since April 2011. This will raise concerns about the health of the US housing sector, as Existing Home Sales and New Home Sales also missed their estimates in December. The silver lining on Thursday was courtesy of Advanced GDP, which posted its best reading in two years, with a strong gain of 3.2% in Q4. This was just shy of the estimate of 3.3%, and a nice rise from the 2.8% gain in Q3. So where is the US economy headed? With GDP posting strong gains but employment numbers struggling, the recovery does not seem to be creating many new jobs, which could seriously hamper long-term economic growth.

In a highly anticipated decision, the Federal Reserve pressed the taper trigger for a second month in a row last week . This reduces its stimulus program (QE) by another $10 billion, lowering the bond-buying scheme to $65 billion each month. Fed chair Bernard Bernanke has indicated that the Fed plans to wind up QE by the end of the year, so we can expect further tapers, barring any surprise downturns in the US economy. Wednesday’s policy statement was Bernard Bernanke’s last hurrah, as Janet Yellen takes over the reins as the Fed chair on February 1.

AUD/USD for Monday, February 3, 2014

AUD/USD February 3 at 13:20 GMT

AUD/USD 0.8796 H: 0.8808 L: 0.8739

AUD/USD Technical

• AUD/USD has posted modest gains on Monday. The pair is testing the 0.88 line and touched a high of 0.8808 early in the European session.
• 0.8735 is providing support. This is followed by support at 0.8658.
• 0.8893 is the next line of resistance. It is followed by resistance at the key level of 0.9000.
• Current range: 0.8735 to 0.8893

Further levels in both directions:

• Below: 0.8735, 0.8658, 0.8505, 0.8425 and 0.8363
• Above: 0.8893, 0.9000, 0.9119 and 0.9229

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in long positions in Monday trading. This is consistent with what we are seeing from the pair, as the Australian dollar has moved higher against the US currency. AUD/USD ratio is made up of a substantial majority of long positions, reflecting a trader bias towards the Australian dollar continuing to move higher against the US currency.

The Australian dollar is trading close to the 0.88 line in Monday trading. AUD/USD has made gains in the European session and the US dollar remains under pressure.

AUD/USD Fundamentals

• 00:30 Australian Building Approvals. Estimate -0.3%. Actual -2.9%.
• 00:30 Australian ANZ Job Advertisements. Estimate -0.3%.
• 5:30 Australian Commodity Prices. Estimate -9.9%.
• 14:00 US Treasury Secretary Jack Lew Speaks.
• 14:00 US Final Manufacturing PMI. Estimate 53.8 points.
• 15:00 US ISM Manufacturing PMI. Estimate 56.2 points.
• 15:00 US Construction Spending. Estimate 0.3%.
• 15:00 US ISM Manufacturing Prices. Estimate 54.2 points.
• All Day – Total Vehicle Sales. Estimate 15.6M.

*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.