AUD/USD – Aussie Slightly Higher, US Consumer Spending Within Expectations

The Australian dollar has posted slight gains on Monday, as AUD/USD trades at 0.7530 at the start of the North American session. On the release front, Core PCE Price Index and Personal Spending were close to their estimates. Later in the day, the US releases Pending Home Sales. There are no Australian releases on the schedule.

US Final GDP posted a gain of 1.4 percent in the fourth quarter, supported by a climb in household spending, a key driver of economic growth. This figure beat the estimate of 1.0 percent, but was lower than the 2.0 percent gain in Q3. With the global slowdown taking a bite out of US exports, strong consumer spending has been the engine behind the economy’s growth. The economy grew at a pace of 2.0 percent in 2015, identical to the figure of 2014. What can we expect for the first quarter of 2016? The financial markets were in turmoil in the early weeks of the year, so GDP in Q1 will be hard-pressed to post similar numbers.

US durable reports in February pointed to a manufacturing sector which continues to struggle. Core Durable Goods Orders posted a decline of 1.0%, well short of the forecast of a 0.2% drop. This marked the indicator’s third decline in four months. Durable Goods Orders was even worse, with a reading of -2.8%, slightly above the estimate of -3.0%. This slowdown is reflective of weak global demand, which has had a strong negative impact on the manufacturing sectors of developed economies worldwide, including the US.

A flurry of hawkish statements from Federal Reserve members last week resulted in broad gains for the dollar, which gained close to 100 points last week against the Aussie. After a dovish policy statement from the Fed, a market hike did not seem likely until before June. The markets have quickly changed this assessment after some Fed officials called for an April hike. Fed chair Janet Yellen will make a speech in New York on Tuesday, and the US dollar could jump if Yellen does not rule out an April move.

AUD/USD Fundamentals

Monday (March 28)

• 8:30 US Core PCE Price Index. Estimate 0.2%. Actual 0.1%
• 8:30 US Personal Spending. Estimate 0.2%. Actual 0.1%
• 8:30 US Goods Trade Balance. Estimate -62.3B
• 8:30 US Personal Income. Estimate 0.1%. Actual 0.2%
• 10:00 US Pending Home Sales. Estimate 1.2%

Upcoming Key Events

Tuesday (March 29)

• 10:00 US CB Consumer Confidence. Estimate 93.9 points

*Key releases are highlighted in bold

*All release times are DST

AUD/USD for Monday, March 28, 2016

AUD/USD March 28 at 8:30 DST

AUD/USD  Open: 0.7501 Low: 0.7492 High: 0.7540 Close: 0.7527

AUD/USD Technical

• AUD/USD posted slight gains in the Asian session and has leveled off in European trade.
• 0.7472 is providing support
• 0.7560 is a weak resistance line
• Current range: 0.7472 to 0.7560

Further levels in both directions:

• Below: 0.7472, 0.7385 and 0.7213
• Above: 0.7560, 0.7678, 0.7796 and 0.7913

OANDA’s Open Positions Ratio

The AUD/USD ratio shows short positions with a majority (54%). This is indicative of trader bias towards AUD/USD 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.