AUD/USD: Stable as Aussie New Home Sales Plunges

The Australian dollar continues to trade very close to the 0.94 level at the start of the new trading week. The currency managed to shrug off dismal housing data, as HIA New Home Sales declined by 4.3%, its worst drop in almost a year. In the US, we’ll get a look at US Pending Home Sales, as well as Chicago PMI.

Last week’s US releases were mixed. Unemployment Claims continued to show little change, extending the trend we have seen in the month of June. The key indicator came in at 312 thousand, slightly better than the estimate of 314 thousand. Earlier in the week, GDP shocked the markets with a five-year low and durables softened as well. GDP dropped by 2.9%, much worse than the 1.8% loss expected by the markets. Core Durable Goods Orders declined by 0.1%, its first decline in five months. The estimate stood at 0.3%. Durable Goods Orders looked even worse, coming in at -1.0%, shy of the estimate of -0.1%. On a positive note, CB Consumer Confidence improved in May, and this could translate into stronger consumer spending, which is critical for economic growth.

HIA New Home Sales is an important gauge of activity in the Australian housing sector. The indicator came in at -4.3%, its sharpest decline since last July. Lack of inflation is not limited to the US and Europe, as the MI Inflation Gauge posted a flat reading of 0.0%, its lowest level since June.

With no economic data out of Australia last week, Chinese and US releases generated much of the movement of AUD/USD. The Australian dollar is sensitive to key Chinese data, as China is Australia’s number one trading partner. Chinese Flash Manufacturing PMI moved above the 50-point level for the first time since November, pointing to expansion in the manufacturing sector. The strong reading helped the Aussie move above the 0.94 line, as the currency continues to trade at high levels against its US counterpart.

AUD/USD for Monday, June 30, 2014

AUD/USD June 30 at 13:40 GMT

AUD/USD 0.9398 H: 0.9432 L: 0.9388

AUD/USD Technical

• AUD/USD edged lower late in the Asian session and is unchanged since then, as the pair hugs the 0.94 line.
• 0.9361 is providing weak support. There is stronger support at 0.9229, which has held firm since early June.
• 0.9446 remains an immediate resistance line. 0.9617 is stronger.

Further levels in both directions:

• Below: 0.9361, 0.9229, 0.9119 and 0.9000
• Above: 0.9446, 0.9617, 0.9757 and 0.9847

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in short positions on Monday. This is consistent with the movement of the pair, as the Australian dollar has edged lower. The ratio has a majority of short positions, indicative of trader bias towards the US dollar gaining ground against the Aussie.

AUD/USD Fundamentals

• 12:30 Australian MI Inflation Gauge. Actual 0.0%.
• 1:00 Australian HIA New Home Sales. Actual -4.3%.
• 1:30 Australian Private Sector Credit. Actual 0.4%. Estimate 0.4%.
• 13:45 US Chicago PMI. Estimate 63.2 points.
• 14:00 US Pending Home Sales. Estimate 1.4%.

*Key releases are highlighted in bold

*All release times are GMT

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