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By Kenny Fisher

The Australian dollar has gained ground on Thursday. AUD/USD is trading in the high-0.87 range in the European session. In economic news, the US Federal Reserve announced another $10 billion reduction in its QE program. Thursday will be a busy day in the US, with three major releases on the schedule - Advance GDP, Unemployment Claims and Pending Home Sales. In Australia, HIA New Home Sales posted a slight decline.

Most analysts had predicted that the Federal Reserve would go ahead and reduce QE for a second straight month, and that's exactly what transpired on Wednesday. In a policy statement, the Federal Reserve reduced its stimulus program by another $10 billion, lowering QE to $65 billion each month. Fed chair Bernard Bernanke has indicated that the Fed plans to wind up QE by the end of the year, so we can expect further tapers, barring any surprise downturns in the US economy. Wednesday's policy meeting was Bernard Bernanke's last hurrah, as Janet Yellen takes over the reins as the Fed chair on February 1.

US manufacturing numbers were sluggish in December. Core Durable Goods Orders posted another decline, its sixth in seven readings. The key manufacturing release fell 1.6%, well short of the estimate of a 0.7% gain. It was the indicator's sharpest drop since August 2012. There was no relief from Durable Goods Orders, which plunged 4.3%, nowhere near the estimate of a 1.9% gain. CB Consumer Confidence looked much sharper, climbing to 80.7 points, up from 78.1 a month earlier. The estimate stood at 78.3 points.

There was some good news out of Australia for a change, as NAB Business Confidence, a key event, improved to 6 points in December, up from 5 points a month earlier. However, CB Leading Indicators failed to keep pace, dropping to just 0.2%, down from a 0.5% gain in November. The strong Business Confidence release gave the wobbly Aussie a brief boost. On Thursday, HIA New Home Sales posted a decline of -0.4% in December, compared to a sharp gain of 7.5% a month earlier.

AUD/USD for Thursday, January 30, 2014

AUD/USD January 30 at 13:30 GMT

AUD/USD 0.8777 H: 0.8792 L: 0.8711

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.84505 0.8658 0.8735 0.8893 0.9000 0.9119
  • AUD/USD has reversed directions in Thursday trading, pushing to higher ground. The pair has been moving steadily higher during the European session and is within striking distance of the 0.88 line.
  • 0.8735 is providing support. This is not a strong line and could face pressure if the Aussie retracts. This is followed by support at 0.8658.
  • 0.8893 is the next line of resistance. It is followed by resistance at the key level of 0.9000.
  • Current range: 0.8735 to 0.8893

Further levels in both directions:

  • Below: 0.8735, 0.8658, 0.8505, 0.8425 and 0.8363
  • Above: 0.8893, 0.9000, 0.9119 and 0.9229

OANDA's Open Positions Ratio

AUD/USD ratio has changed directions in Thursday trading and is pointing to gains in long positions. This is consistent with what we are seeing from the pair, as the Australian dollar has posted gains. AUD/USD ratio is made up of a substantial majority of long positions, reflecting a trader bias towards the Australian dollar continuing to move higher against the US currency.

The Australian has moved higher on Thursday and is trading close to the 0.88 line. Traders can expect some activity from the pair in the North American session, as the US posts three key releases later in the day, highlighted by Unemployment Claims.

AUD/USD Fundamentals

  • 00:00 Australian HIA New Home Sales. Estimate -0.4%.
  • 13:30 US Advance GDP. Estimate 3.3%.
  • 13:30 US Unemployment Claims. Estimate 331K.
  • 13:30 US Advance GDP Price Index. Estimate 1.2%.
  • 15:00 US Pending Home Sales. Estimate -0.1%.
  • 15:30 US Natural Gas Storage. Estimate -225B.

*Key releases are highlighted in bold

Source: Australian Dollar / U.S. Dollar: Higher Despite Weak Aussie Housing Data