AUD/USD – Rally Continues After Solid Australian Releases

The Australian dollar continues to move higher on Thursday. In the European session, AUD/USD is trading in the mid-0.89 range. The Aussie has looked superb this week, jumping over 200 points against the US dollar. Australian releases were positive on Thursday, highlighted by Trade Balance and Business Confidence. In the US, Unemployment Claims bounced back with a strong reading but Trade Balance missed the estimate.

The Australian dollar continues to post gains against the US dollar, fuelled by positive Australian releases on Thursday. Retail Sales posted a gain of 0.5%, matching the forecast. Trade Balance surprised with its first surplus since July, posting a reading of $+0.47 billion. This easily beat the estimate of $-0.27 billion. There was excellent news from NAB Quarterly Business Confidence, which jumped to 8 points in Q4, its highest level in almost three years. This was an impressive leap from the Q3 reading of 3 points.

Over in the US, Unemployment Claims dropped to 331 thousand, down from 348 thousand in the previous release. This was good enough to beat the estimate of 337 thousand. On Friday we’ll get a look at Non-Farm Payrolls, and this key release could dictate whether the Federal Reserve goes ahead with a third QE taper in February. The Federal Reserve has scaled down its bond-buying scheme with two tapers of $10 billion, reducing QE to $65 billion each month. The Fed would like to terminate the scheme by the end of 2014.

Earlier this week, the Reserve Bank of Australia maintained the benchmark interest rate at 2.50%, where it has been pegged since August. This didn’t grab much attention from the markets, but the Rate Statement did and the Aussie shot higher in response. Governor Glenn Stevens noted that interest rates are at an appropriate level, indicating a shift in stance from easing to neutral. He also made a point of noting the Australian dollar’s recent slide, stating that the lower value of the currency will “assist in achieving balanced growth” for the Australian economy. Importantly, Stevens refrained from saying that the Australian dollar was “uncomfortably high” as he has done in the past. The RBA has room to be pleased, as the Aussie has shed 8% of its value in the past three months. However, if the Aussie rebounds and rises into the low-90s, we could see the RBA again attempt to “talk down” the currency.

AUD/USD for Thursday, February 6, 2014

AUD/USD February 6 at 14:45 GMT

AUD/USD 0.8972 H: 0.8980 L: 0.8923

AUD/USD Technical

• AUD/USD continues to improve in Thursday trading.
• 0.8893 continues to provide support. This line has some breathing room as the Aussie moves higher. This is followed by support at 0.8735.
• On the upside, the key level of 0.9000 is the next line of resistance. This line has weakened and could face pressure during the day. It is followed by resistance at the key level of 0.9119.
• Current range: 0.8893 to 0.9000

Further levels in both directions:

• Below: 0.8893, 0.8735, 0.8658, 0.8505 and 0.8425
• Above: 0.9000, 0.9119, 0.9229 and 0.9361

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in long positions in Thursday trading. This is consistent with what we are seeing from the pair, as the Aussie trades at higher levels. AUD/USD ratio is made up of a substantial majority of long positions, reflecting a trader bias towards the Aussie continuing this week’s impressive rally.

The Australian dollar has posted gains in Thursday trading. Will the currency break above the key 0.9000 level? AUD/USD is steady early in the North American session.

AUD/USD Fundamentals

• 00:30 Australian Retail Sales. Estimate 0.5%. Actual 0.5%.
• 00:30 Australian Trade Balance. -0.27B. Actual +0.47B.
• 00:30 Australian NAB Quarterly Business Confidence. Actual 8 points.
• 12:30 US Challenger Job Cuts. Actual 11.6%.
• 13:30 US Trade Balance. Estimate -35.8B. Actual -38.7B. 
• 13:30 US Unemployment Claims. Estimate 337K. Actual 331K.
• 13:30 US Preliminary Nonfarm Productivity. Estimate 2.8%. Actual 3.2%.
• 13:30 US Preliminary Unit Labor Costs. Estimate -0.7%. Actual -1.7%.
• 15:00 US FOMC Member Daniel Tarullo Speaks.
• 15:30 US Natural Gas Storage. Estimate -270B.
• 22:30 Australian AIG Construction Index.

*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.