AUD/USD – Steady as Australian Housing Sales Sparkle

AUD/USD is showing some movement close to the 1.04 line in Thursday trading. In Australia, there was good news as New Home Sales continues to improve, and posted its best reading since May 2012. Private Sector Credit was positive, although import prices disappointed. In the US, the Q4 GDP release looked dismal, posting its first decline since 2009. The ADP Non-Farm Employment Change, which precedes the official US government release, came in well above expectations. The US Federal Reserve wrapped up its policy meeting, and said that QE3 would continue. The markets will be keeping a close eye on US Unemployment Claims, today’s major release.

US key releases continue to be mixed, pointing to a bumpy recovery. The markets got a jolt from an abysmal GDP reading, as the US economy declined by 0.1% in Q4. Although a very modest loss, there is bound to be negative market reaction, as this was the first decline since 2009, and the markets had anticipated a 1.1% gain. There was some positive employment news, as the ADP Non-Farm Employment Change came in at 192 thousand new jobs, well above the estimate of 164 thousand. The markets will be hoping that Thursday’s Unemployment Claims continue to shine, after some excellent readings recently. In Australia, New Home Sales jumped 6.2%, an eight-month high. The indicator has now improved for five consecutive readings, raising hopes that the Australian housing sector is on the mend. Import Prices improved in Q4, gaining 0.3%. This fell short of the 0.5% estimate. Private Sector Credit gained 0.4%, beating the forecast of 0.2%.

All eyes were on the Federal Reserve this week, but there were no surprise developments as the powerful US central bank wrapped up a two-day policy meeting. Analysts were looking for clues as to an end date for the current Quantitative Easing program (QE3), but no such hints were forthcoming. The Fed stated it would continue its open-ended QE3 program until the outlook for the labor market “improves substantially”. This put to rest any doubts that the current round of QE, under which the Fed is purchasing $85 billion a month in securities, will be terminated anytime soon. At the same time, the Federal Reserve took note of increased job hirings, stronger consumer and business spending, and some improvement in the US housing sector. The Fed also maintained its ultra-low benchmark interest rate, saying there would be no change until unemployment drops below 6.5%. With US unemployment close to 8%, we will likely be hearing this refrain for the foreseeable future.

AUD/USD for Thursday, January 31, 2013

AUD/USD January 31 at 11:30 GMT

1.0418  H: 1.0432  L: 1.0380

AUD/USD Technical

AUD/USD is not showing much activity, and is trading close to the 1.04 line. On the upside, the pair is testing the 1.0424 line. There is stronger resistance at 1.0473. AUD/USD is receiving support at 1.0376. This is followed by support at 1.0334.

Current range: 1.0376 to 1.0424.

Further levels in both directions:

• Below: 1.0376, 1.0334, 1.0230, 1.0174 and 1.0031.
• Above: 1.0424, 1.0473, 1.0568, 1.0605, 1.0718, 1.0874 and 1.0961.

OANDA’s Open Position Ratios

The AUD/USD ratio continues to be subdued, with little movement. We are seeing a similar trend in the currency pair, as AUD/USD is trading in a narrow range just above the 1.04 line. If some movement is detected in the ratio, it could be an indication that the pair will break out.

AUD/USD has not reacted to very weak US GDP data nor to positive Australian housing numbers. The markets will be montoring key US employment data later on Thursday, and an unexpected reading could shake the pair out of its slumber.

AUD/USD Fundamentals

• 00:00 Australian HIA New Home Sales. Actual 6.2%.
• 00:30 Australian Import Prices. Estimate 0.5%. Actual 0.3%.
• 00:30 Australian Private Sector Credit. Estimate 0.2%. Actual 0.4%.
• 12:30 US Challenger Job Cuts.
• 13:30 US Unemployment Claims. Estimate 362K.
• 13:30 US Core PCE Price Index. Estimate 0.1%.
• 13:30 US Employment Cost Index. Estimate 0.6%.
• 13:30 US Personal Spending. Estimate 0.4%.
• 13:30 US Personal Income. Estimate 0.7%.
• 14:45 US Chicago PMI. Estimate 51.1 points.
• 15:30 US Natural Gas Storage. Estimate -202B.

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.