AUD/USD – Unsteady as Aussie Data Disappoints

AUD/USD showed some volatility in early Thursday trading. The pair touched below the 1.02 line in the Asian session, but has since bounced back, and was trading in the mid-1.02 range. Australian data looked weak, underscoring a troubled Australian economy. In the US, the picture looked much brighter, as key data continued to shine for the second day running. There are two major releases out of the US later on Thursday – GDP and Unemployment Claims.

This week’s Australian data has been sluggish, and of little help to the struggling Australian dollar. Construction Work Done declined by 0.1%, surprising the markets, which had anticipated at robust gain of 1.5%. HIA New Home Sales climbed 4.2%, well below the previous reading of 6.2%. Private Capital Expenditure, a key release, declined 1.2%. This was well below the forecast of a 1.1% gain. Private Sector Credit rose 0.2%, just below the estimate of 0.3%. In the US, the picture could not have been more different as key indicators sparkled for a second straight day. Core Durable Goods Orders climbed 1.9%, easily exceeding the estimate of 0.3%. Pending Home Sales shot up 4.5%, well above the estimate of 1.7%. There was some disappointment from Durable Goods Orders, which declined 5.2%. The estimate stood at -4.8%. 

The Reserve Bank of Australia has left room for additional interest rate cuts, and this theme was reiterated by RBA Assistant Governor Guy Debelle, who stated earlier in the week that the high value of the Australian dollar was weighing on the Australian economy. Debelle hinted that the central bank could take monetary action to help the ailing Australian economy. With the RBA setting interest rates next week, we could see the Aussie lose ground if the markets feel that the RBA will make good on their promise and lower rates.

The Federal Reserve was in the spotlight this week, as Fed Chief Bernard Bernanke was busy testifying before the Senate and the House of Representatives. Bernanke sought to reassure the markets that the Fed was intent on continuing the current round of QE. Bernanke dismissed fears that the Fed’s current monetary policy could result in higher inflation or lead to a stock market bubble. There had been some speculation after the release of minutes from the most recent policy meeting, that the Fed was contemplating an end to QE, but Bernanke stated that Fed plans to continue QE and the current policy of ultra-low interest rates for the near future.

AUD/USD for Thursday, Feb 28, 2013

AUD/USD Feb 28 at 12:45 GMT

1.0259 H: 1.0290 L: 1.0197 

AUD/USD Technical

AUD/USD remains under pressure, and the pair briefly touched below the 1.02 line earlier. Currently, the pair is receiving support at 1.0230. This is a weak line, and could see further activity as AUD/USD continues to fluctuate. The next level of support is at 1.0174. This strong line has not been tested since last October. On the upside, 1.0334 is providing resistance. This is followed by resistance at 1.0424.

Current range: 1.0230 to 1.0334

Further levels in both directions:

• Below: 1.0230, 1.0174, 1.0080, 1.00 and 0.9948
• Above: 1.0334, 1.0424, 1.0568 and 1.0605

OANDA’s Open Position Ratios

The AUD/USD ratio has resumed activity, pointing to movement towards short positions. The Australian dollar is showing volatility, but we are not seeing any sustained movement in either direction. If the ratio continues to indicate movement towards short positions, this could signal an expectation that the Aussie will lose ground against the US dollar.

AUD/USD continues to fluctuate as the pair tries to find its footing. Disappointing Australian data continues to weigh on the currency, but US data has been strong this week, and additional solid numbers could give investors more appetite for risk assets such as the Australian dollar.

AUD/USD Fundamentals

• 00:00 Australian HIA New Home Sales. Estimate 1.5%. Actual -0.1%.
• 00:30 Australian Private Capital Expenditure. Estimate 1.1%. Actual -1.2%.
• 00:30 Australian Private Sector Credit. Estimate 0.3%. Actual 0.2%.
• 13:30 US Preliminary GDP. Estimate 0.5%.
• 13:30 US Unemployment Claims. Estimate 361K.
• 13:30 US Preliminary GDP Price Index. Estimate 0.6%.
• 14:45 US Chicago PMI. Estimate 54.6 points.
• 15:30 US Natural Gas Storage. Estimate -165B.
• 17:30 US FOMC Member Sarah Bloom Raskin Speaks.
• 22:30 Australian AIG Manufacturing 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.