AUD/USD - Aussie At 5 Month Highs After Strong Data

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

By Kenny Fisher

AUD/USD continues to push upwards, as the pair trades in the mid-0.93 level. The Aussie has gained over 100 pips since Monday, as the currency trades at five-month highs against the US dollar. In economic news, Home Loans and Consumer Sentiment showed significant improvement in March.

Australian data looked sharp on Wednesday. Westpac Consumer Sentiment came in at 0.3%, its first gain since October. Home Loans followed suit, jumping 2.3%, well above the estimate of 1.7%. This was the best showing from the housing indicator in five months. The strong data boosted the Aussie, which finds itself within striking distance of the 0.94 level.

The Federal Reserve will be front stage and center on Wednesday, as the markets await the releases of the minutes of its most recent policy meeting. Last week, Fed chair Janet Yellen sounded dovish in her outlook on the US economy, saying that inflation and employment levels needed to improve and monetary stimulus would continue for some time. So it shouldn't be a surprise if the minutes state that the US still has a long way to go on the road to recovery. If the minutes don't paint an upbeat picture of the US economy, the dollar could lose some ground. Currently, the Fed is purchasing $55 billion in assets each month under its QE scheme. There have been three tapers to QE so far, and Yellen plans to wind up the program in the fall, provided that the US economy does not run into any serious turbulence, which would possibly force the Fed to delay further tapers. As the tapers are dollar-positive, any delay would be bearish for the greenback.

On Friday, US Nonfarm Payrolls improved nicely, climbing to 192 thousand, compared to 175 thousand a month earlier. However, the markets were looking for more, with the estimate standing at 199 thousand. The Unemployment Rate also fell short of the estimate, as it remained unchanged at 6.7%. Although these numbers were not as strong as hoped, the Federal Reserve is expected to continue trimming QE when it meets at the end of April. These tapers mark a vote of confidence in the US economy by the Federal Reserve, and are dollar-positive.

AUD/USD for Wednesday, April 9, 2014

Forex Rate Graph 21/1/13

AUD/USD April 9 at 14:05 GMT

AUD/USD 0.9352 H: 0.9386 L: 0.9336

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.9000 0.9119 0.9229 0.9361 0.9446 0.9542
Click to enlarge
  • AUD/USD has steadied on Wednesday after strong gains a day earlier. The pair punched past the 0.93 line early in the European session.
  • 0.9229 is providing strong support.
  • 0.9361 continues to provide weak resistance and was briefly breached earlier in the day. Will the pair break through this line? There is stronger resistance at 0.9446.
  • Current range: 0.9229 to 0.9361

Further levels in both directions:

  • Below: 0.9229, 0.9119, 0.9000, 0.8893 and 0.8735
  • Above: 0.9361, 0.9446, 0.9542 and 0.9617

OANDA's Open Positions Ratio

AUD/USD ratio is pointing to strong gains in short positions on Wednesday, reversing the trend we saw a day earlier. This is not consistent with what we are seeing from the pair, as the Australian dollar has edged higher. AUD/USD ratio is currently showing a slight majority of short positions, indicating slight trader bias towards the US dollar moving higher.

The Australian has steadied on Wednesday after sharp gains a day earlier. Early in the North American session, the pair has edged lower.

AUD/USD Fundamentals

  • 00:30 Australian Westpac Consumer Sentiment. Exp. 0.3%.
  • 1:30 Australian Home Loans. Estimate 1.7%. Actual 2.3%.
  • 14:00 US Wholesale Inventories. Estimate. 0.5%. Actual 0.5%.
  • 14:30 US Crude Oil Inventories. Estimate 1.0M.
  • 17:01 US 10-year Bond Auction.
  • 18:00 US FOMC Meeting Minutes.
  • 23::00 US FOMC Member Daniel Tarullo 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.