Struggling Aussie Starts Off Week Below 0.89

by: Dean Popplewell

By Kenny Fisher

The Australian dollar is under pressure from its US counterpart as we start the new trading week. AUD/USD lost ground last week and finds itself below the 0.89 line in Monday's European session. The Aussie has had a miserable December, coughing up about 300 points since the start of the month. In economic news, there are no Australian releases on Monday. Over in the US, today's only release is Pending Home Sales. The markets are expecting a strong gain after a string of declines from the key housing indicator.

Late last week, Unemployment Claims bounced back nicely following two disappointing releases. The key employment indicator fell to 338,000, compared to 379,000 in the previous release. The estimate stood at 346,000. With the Federal Reserve poised to begin its long-awaited QE taper next month, employment releases have taken on added significance. If the US labor market continues to improve, the Fed could decide on another taper early in 2014, which would give a boost to the US dollar against its major rivals.

There was some holiday cheer from US releases last week as manufacturing and housing numbers pointed upwards. Core Durable Goods Orders posted a strong gain of 1.2%, its best showing since April. The key manufacturing indicator had posted four consecutive declines, so the sharp gain was welcome news. Durable Goods Orders bounced back from a sharp decline in October with a gain of 3.5%, well above the estimate of 1.7%. New Homes Sales also impressed with a five-month high, climbing to 464,000. The estimate stood at 449,000.

AUD/USD for Monday, December 30, 2013

Forex Rate Graph 21/1/13

AUD/USD December 30 at 12:50 GMT

AUD/USD 0.8874 H: 0.8884 L: 0.8834

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.8505 0.8658 0.8735 0.8893 0.9000 0.9119
Click to enlarge
  • AUD/USD has posted slight gains in the European session.
  • On the downside, 0.8893 is under strong pressure. This weak line could fall if the Australian dollar pushes higher. This is followed by the key round number of 0.9000.
  • On the downside, 0.8735 is providing strong support. The next support level is 0.8658, which has remained intact since July 2010.
  • Current range: 0.8735 to 0.8893

Further levels in both directions:

  • Below: 0.8735, 0.8658, 0.8505 and 0.8411
  • Above: 0.8893, 0.9000, 0.9119, 0.9229 and 0.9305

OANDA's Open Positions Ratio

AUD/USD ratio is showing little change in Monday trading. This is consistent with what we are seeing from the pair, which is not showing much movement. The ratio is made up of a substantial majority of long positions, reflecting a trader bias toward the Australian dollar moving higher against the US currency.

The Australian dollar remains under pressure as it trades below the 0.89 line. We could see some stronger movement in the North American session as the US releases key housing data.

AUD/USD Fundamentals

15:00 US Pending Home Sales. Exp. 1.1%.

*Key releases are highlighted in bold