AUD/USD - Aussie Slide Continues After Weak Australian Numbers

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 |  Includes: FXA, UDN, UUP
by: Dean Popplewell

By Kenny Fisher

The Australian dollar continues to lose ground on Thursday, as AUD/USD finds itself in the low-0.89 range. In economic news, Australian Private Capital Expenditure took a tumble in January, slipping to its lowest level in almost five years. In the US, key events were a mix, as Core Durable Goods Orders posted a strong gain, but Unemployment Claims came in well above the estimate. The Federal Reserve will be in the spotlight later in the day, as Fed Chair Janet Yellen testifies before a Senate committee.

Australian releases continue to disappoint this week. Private Capital Expenditure fell by 5.2%, its sharpest drop since April 2009. The reading was much worse than expected, with the estimate standing at -1.0%. This dismal figure comes on the heels of Construction Work Done, which dropped by 1.0%, its fourth decline in five months. The Aussie has responded with further losses, and has given up about a cent since Tuesday.

US manufacturing data looked strong, as Core Durable Goods Orders jumped 1.1%, surprising the markets, which had expected a decline of -0.1%. Unemployment Claims did not look as sharp, as the key indicator rose to 348 thousand, well above the estimate of 333 thousand. Meanwhile, a nasty streak of weak US releases ended on Wednesday as New Home Sales jumped by 468 thousand, crushing the estimate of 406 thousand. It was the key indicator's best showing since last June, and helped allay concerns about the health of the housing sector, following weak housing numbers last week.

The markets are keeping a close eye on Capitol Hill, as Federal Reserve Chair Janet Yellen testifies before the Senate later on Thursday. Yellen is expected to reiterate that Fed will likely continue trimming QE, barring any downturns in the economy. Last week's Federal Reserve minutes indicated that interest rates are unlikely to rise, even if unemployment drops to 6.5%. Previously, the Fed had said it would consider raising rates at the 6.5% threshold, but with unemployment falling faster than expected, Federal Reserve policymakers agreed that it would “soon be appropriate” to revise the Fed’s forward guidance regarding interest rate levels, and such a move could shake up the currency markets.

AUD/USD for Thursday, February 27, 2014

Forex Rate Graph 21/1/13

AUD/USD February 27 at 14:55 GMT

AUD/USD 0.8933 H: 0.8968 L: 0.8905

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 Thursday trading. The pair touched a low of 0.8905 early in the Australian session.
  • 0.9000 continues to provide resistance. This is followed by stronger resistance at 0.9119.
  • On the downside, there is weak support at 0.8893. With the Aussie under strong pressure, will this line hold? The next support line is 0.8735.
  • Current range: 0.8893 to 0.9000

Further levels in both directions:

  • Below: 0.8893, 0.8735, 0.8658 and 0.8516
  • Above: 0.9000, 0.9119, 0.9229, 0.9361 and 0.9466

OANDA's Open Positions Ratio

AUD/USD ratio is pointing to gains in long positions in Thursday trading. This is not consistent with what we are seeing from the pair, as the Aussie continues to lose ground. AUD/USD ratio is made up of a majority of long positions, reflecting a trader bias towards the Australian dollar reversing directions and moving higher against the US currency.

AUD/USD remains under strong pressure on Thursday. The pair is steady in the North American session.

AUD/USD Fundamentals

  • 00:30 Australian Private Capital Expenditure. Estimate -1.0%. Actual -5.2%.
  • 13:30 US Core Durable Goods Orders. Estimate -0.1%. Actual +1.1%.
  • 13:30 US Unemployment Claims. Estimate 333K. Actual 348K.
  • 13:30 US Durable Goods Orders. Estimate -0.7%. Actual -1.0%.
  • 15:00 Federal Reserve Chair Janet Yellen testifies before the Senate Banking Committee.
  • 15:30 US Natural Gas Storage. Estimate -110B. Actual -95B.

*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.