AUD/USD – Aussie Strengthens As Building Approvals Soar

The Australian dollar has moved higher as we begin the new trading week. The pair is testing the important 0.90 line early in Monday’s North American session. The Aussie received a boost as Building Approvals surged to a fourteen-month high. The US markets are closed for the Labor Day holiday.

AUD/USD started the week on the right foot, as Building Approvals, a key event, jumped from -6.9% in July to 10.8% in August. This was the indicator’s sharpest gain since July 2012. The Aussie also received help from a solid reading from Chinese Manufacturing PMI. The index posted a sixteen-month high, jumping from 50.3 points in July to 51.0 points in August. This beat the estimate of 50.6 points. The Australian dollar is sensitive to key Chinese releases, as the Asian giant is Australia’s largest trading partner. Australian Company Profits was a disappointment, posting a decline of -0.8%. The estimate stood at 1.1%.

The markets displayed some volatility last week in anticipation of an expected US military strike against Syria, after a chemical attack in the war-torn country killed hundreds. However, the attempt by the US to secure a coalition ran into trouble, and President Obama said on the weekend that he will seek Congressional approval before taking any action against Syria. With Congress in recess until September 9th, a military strike could be delayed until mid-September or even later. Meanwhile, the markets have now settled down as we begin the new trading week.

When will the Federal Reserve taper QE? The Federal Reserve has not given any hints, and recent statements from Fed policymakers underscore divisions regarding the timing of such a move. What is clear is that stronger US numbers will increase the likelihood of the Fed acting sooner rather than later. This means that US releases, especially employment data, will be under the market microscope and traders should be prepared for the Fed to begin tapering at any time, which will likely bolster the US dollar.

AUD/USD for Monday, September 2, 2013

AUD/USD September 2 at 13:35 GMT

AUD/USD 0.8992 H: .9014 L: 0.8937

AUD/USD Technical

• AUD/USD has improved in Monday trading. The pair posted gains in the Asian session and dipped above the 0.90 line in European trading.
• The pair is testing resistance at the critical 0.90 line. This is followed by a strong resistance line at 0.9089.
• On the downside, the pair is receiving support at 0.8926. This line has some breathing room as the pair trades at higher levels. This is followed by support at 0.8848. This line has remained intact since January.
• Current range: 0.8926 to 0.9000

Further levels in both directions:

• Below: 0.8926, 0.8848, 0.8747 and 0.8578
• Above: 0.9000, 0.9089, 0.9135, 0.9221 and 0.9328

OANDA’s Open Positions Ratio

AUD/USD ratio is unchanged in Monday trading, continuing a trend we have seen since the middle of last week. This is not reflected in the pair’s current movement, as the Australian dollar has posted gains. The ratio is made up of a solid majority of long positions, indicating that trader sentiment is strongly biased towards the Australian dollar continuing to post gains against the US currency.

The Aussie has shown some upward movement and is pressing on the 0.90 line. With US markets closed on Monday, we are likely to see AUD/USD continue to trade close to the 0.90 level in the North American session.

AUD/USD Fundamentals

• 00:30 Australian MI Inflation Gauge. Actual 0.1%.
• 1:30 Australian Building Approvals. Estimate 4.1%. Actual 10.8%.
• 1:30 Australian Company Operating Profits. Estimate 1.1%. Actual -0.8%.
• 6:30 Australian Commodity Prices. Actual -7.3%.

*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.