AUD/USD - Weak Australian Employment Data Pulls Down Aussie

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Includes: FXA
by: Dean Popplewell

By Kenny Fisher

AUD/USD has posted strong losses on Thursday, as the pair trades in the mid-0.92 range early in the North American session. On the release front, Australian employment numbers were weak. It was a different story in the US, as Unemployment Claims dipped below the 300 thousand level.

In Australia, key employment data failed to impress. Employment Change came in at -0.3 thousand, well off the estimate of +13.5 thousand. As well, the unemployment rate jumped to 6.4%, up from 6.0%. These disappointing numbers weighed on the Australian dollar, pushing it below 0.93 and down to its lowest level since early June. We could see further movement from AUD/USD on Friday, as the RBA releases a policy statement. Earlier in the week, the RBA held interest rates at 2.50%.

US Unemployment Claims dipped back below the 300 thousand level last week. The key indicator dropped to 289 thousand, beating the estimate of 305 thousand. The four-week claims average, which is less volatile than the weekly count, dipped to 293,500, its lowest level since February 2006. The stronger numbers point to increased hiring in response to stronger demand, which in turn has contributed to gains in income and stronger consumer spending. An improving job market is critical for economic growth, and the dollar has gained broad strength as key US data points upwards.

US PMIs continue to point upwards, indicative of an improving US economy. On Tuesday, ISM Non-manufacturing PMI looked sharp, rising to 58.7 points last month. This easily beat the estimate of 56.6, and was the index’s best showing since February 2011. This follows an excellent Manufacturing PMI reading last week, with the index climbing to 57.1 points, a three-year high. There was more positive news out of the US on Tuesday, as Factory Orders had an impressive July, gaining 1.1%. These solid numbers point to healthy expansion in the US manufacturing and services sectors, which has resulted in gains for the US dollar against its major rivals.

AUD/USD for Thursday, August 7, 2014

AUD/USD August 7 at 14:30 GMT

AUD/USD 0.9274 H: 0.9358 L: 0.9259

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.9020 0.9119 0.9229 0.9361 0.9446 0.9617
Click to enlarge
  • AUD/USD posted sharp losses in the Asian session. The pair has remained steady in the European and North American sessions.
  • On the downside, 0.9229 has weakened as the Australian dollar trades at lower levels. 0.9119 is a stronger support line.
  • 0.9361 is a strong resistance line.
  • Current range: 0.9229 to 0.9361

Further levels in both directions:

  • Below: 0.9229, 0.9119 and 0.9020
  • Above: 0.9361, 0.9446, 0.9617 and 0.9757

OANDA's Open Positions Ratio

AUD/USD ratio is pointing to gains in long positions on Thursday, continuing the direction seen a day earlier. This is not consistent with the movement of the pair, as the Australian dollar has weakened. The ratio has a majority of long positions, indicative of trader bias towards the Australian dollar reversing directions and moving to higher ground.

AUD/USD Fundamentals

  • 1:30 Australian Employment Change. Estimate 13.5K. Actual -0.3K.
  • 1:30 Australian Unemployment Rate. Estimate 6.4%. Actual 6.0%.
  • 12:30 US Unemployment Claims. Estimate 305K. Actual 289K.
  • 14:30 US Natural Gas Storage. Estimate 89B. Actual 82B.
  • 19:00 US Consumer Credit. Estimate 18.3B.

* 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.