AUD/USD – Pushes Higher Despite Weak Aussie Data

AUD/USD has started the new trading week in fine fashion, posting gains and pushing above the 1.04 line. The pair was trading in the 1.0420 range in Monday’s European session. The pair has shrugged off some weak Australian data as it moves higher. AIG Construction Index fell from 45.6 points to 39.0 points, indicating further contraction in the construction sector. ANZ Job Advertisements posted a decline of 1.5%, in sharp contrast to last month’s gain of 3.0%. In the US, the week is starting off quietly, with only one release on Monday, as Fed Reserve Chairman Bernard Bernanke addresses a conference hosted by the Federal Reserve of Atlanta.

In Japan, the markets are keeping a close eye on the Bank of Japan. The Japanese yen took a hit following the Bank of Japan’s policy meeting last week, the first under new BOJ Governor Kuroda. The markets were caught by surprise as the BOJ announced aggressive easing steps aimed at eliminating deflation, which continues to hobble the Japanese economy. The BOJ is wasting no time, and has made good on its promise to purchase large amounts of government bonds. This move is aimed at pushing down longer-term interest rates in order to encourage businesses to borrow and spend more in order to increase activity in the economy and create inflation.  The BOJ purchased JPY 1 trillion in 5-10 year bonds, and an additional JPY200 billion in bonds with maturities exceeding 10 years.

In the US talk of a deepening recovery is being replaced by concerns about the direction the economy, as the US continues to post out dismal numbers. With every major release over the past two weeks failing to meet expectations, the markets are justifiably becoming increasingly anxious. The data comes from sectors throughout the economy – housing, manufacturing consumer confidence and employment releases have all missed their estimates. On Friday, Non-Farm Payrolls followed the string of dismal releases, posting its worst showing since July 2012. There were 88 thousand new jobs created, way below the estimate of 198 thousand. Will we see a turnaround in this week’s numbers? If not, we could see some volatility in the currency markets.

AUD/USD for Monday, April 8, 2013

AUD/USD April 8 at 11:40 GMT

1.0417 H: 1.0423 L: 1.0351

AUD/USD Technical

AUD/USD has moved higher in Monday trading, and has climbed above the 1.04 level. On the upside, the pair is testing 1.0424. We could expect this line to see more pressure during the day. The pair faces stronger resistance at 1.0497. This line is protecting at 1.05 level. On the downside, the pair is receiving support at 1.0334. This is followed by a support level at 1.0230.

Current range: 1.0334 to 1.0424

Further levels in both directions:

• Below: 1.0334, 1.0230, 1.0174 and 1.0080
• Above: 1.0424, 1.0497, 1.0568, 1.0605 and 1.0697

OANDA’s Open Position Ratios

The AUD/USD ratio is pointing to movement towards long positions. This is consistent with what we are seeing from the pair, as the Australian dollar has started the week with gains against the US dollar. We can expect to movement in the ratio to continue while the pair continues to move upwards.

The Australian dollar is looking sharp in Monday trading, despite some disappointing data out of Australia to start the week. With no economic data coming out of the US on Monday, the markets will focus on a couple of important releases scheduled for late Monday – Chinese CPI and Australian NAB Business Confidence. We could see some movement from the pair, based on the market reaction to these important releases.

AUD/USD Fundamentals

• 1:30 Australian ANZ Job Advertisements. Actual -1.5%.
• 11:15 US Fed Chairman Bernard Bernanke Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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