AUD/USD - Aussie Lower After Mixed U.S. Retail Sales

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Includes: FXA, UDN, UUP
by: Dean Popplewell

By Kenny Fisher

The Australian has lost ground on Tuesday, erasing the gains made over the past two days. AUD/USD is trading just above the 0.9000 line early in the North American session. In economic news, US Retail Sales dropped in December, while Core Retail Sales improved and beat the estimate. There are no Australian releases on Tuesday.

US retail sales numbers painted a mixed picture on Tuesday. Retail Sales dropped sharply to 0.2%, down from 0.7% in November. However, this figure matched the forecast. Core Retail Sales took the opposite route, jumping to 0.7%, compared to 0.4% the month before. This easily beat the estimate of 0.4%. The greenback has responded with gains against the Australian dollar.

Australian releases were mixed to start off the new trading week. ANZ Job Advertisements continues to struggle, posting a December release of -0.7%. This was the indicator's third straight decline in what was a weak 2013. Home Loans showed little change, posting a respectable gain of 1.1%, which matched the forecast.

US employment numbers started 2014 on a positive note, but Friday’s Non-Farm Payrolls was dismal, posting its lowest gain since May 2012. The key employment indicator dropped to just 74 thousand, down from 203 thousand a month earlier. This was nowhere near the estimate of 196 thousand. Although the unemployment rate dropped to 6.7%, this was due to a drop in the participation rate, which fell to 62.8%, its lowest level since 1978. This figure points to a worrying trend of a jobless US recovery.

Friday's disappointing Non-Farm Payrolls report may create some concern in the markets, but is unlikely to change the Federal Reserve's path of tapering QE, which it started just this month. In December, outgoing Fed chair Bernard Bernanke strong hinted that the Fed planned to wind up QE by the end of 2014, reducing the asset-purchase program by increments of $10 billion at each meeting. The Fed next meets for a policy meeting on January 28, and the question is will the Fed reduce QE by another $10 billion, down to $65 billion each month. Most analysts feel that one bad employment report will not affect the taper schedule and we will see a reduction in QE at the next meeting.

AUD/USD for Tuesday, January 14, 2014

Forex Rate Graph 21/1/13

AUD/USD January 14 at 14:20 GMT

AUD/USD 0.8994 H: 0.9054 L: 0.8996

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.8658 0.8735 0.8893 0.9000 0.9119 0.9229
Click to enlarge
  • AUD/USD has posted losses in Tuesday trading. The pair dropped below the key 0.90 line in the European session.
  • 0.8893 is providing strong support. This is followed by support at 0.8735, which has remained intact since July 2010.
  • 0.9000 has switched back to a resistance role. It is a weak line and could face more pressure during the day. It is followed by resistance at 0.9119.
  • Current range: 0.8893 to 0.9000

Further levels in both directions:

  • Below: 0.8893, 0.8735, 0.8658 and 0.8505
  • Above: 0.9000, 0.9119, 0.9229 and 0.9305 and 0.9448

OANDA's Open Positions Ratio

AUD/USD is pointing to gains by short positions in Tuesday trading. This is consistent with what we are seeing from the pair, as the Australian dollar has lost ground. AUD/USD is made up of a substantial majority of long positions, reflecting a trader bias towards the Australian dollar moving higher against the US currency.

The Australian dollar has lost ground in Tuesday trading. The pair has steadied early in the North American session as hugs the 0.9000 line.

AUD/USD Fundamentals

  • 12:30 US NFIB Small Business Index. Estimate 93.2 points.
  • 13:30 US Core Retail Sales. Estimate 0.4%. Actual 0.7%.
  • 13:30 US Retail Sales. Estimate 0.2%. Actual 0.2%.
  • 13:30 US Import Prices. Estimate 0.3%. Actual 0.0%.
  • 15:00 US Business Inventories. Estimate 0.4%.
  • 17:45 US FOMC Member Charles Plosser Speaks.
  • 18:20 US FOMC Member Richard Fisher Speaks.

*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.