AUD/USD - Stable As Australian Business Confidence Data Shines

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

By Kenny Fisher

AUD/USD is steady on Tuesday, as the pair continues to trade in the mid-0.92 range. On the release front, Australian NAB Business Confidence jumped to 11 points last month. HPI beat the estimate, posting a gain of 1.8%. In the US, JOLTS Job Openings improved to 4.67 million, but fell short of the estimate.

Australian data started the week in fine form. NAB Business Confidence rose to 11 points, its best showing since September. This was the fifth straight increase, pointing to rising confidence in the economy on the part of the business sector. We'll get a look at consumer confidence early on Wednesday. Elsewhere, the Housing Price Index, an important inflation indicator, improved to 1.8% last month, easily beating the estimate of 1.1%. The Aussie failed to take advantage of the strong numbers, as it remains below the 0.93 line.

The RBA released its monetary policy statement on Friday, and there wasn't much good news for the markets. The statement noted that the RBA has lowered its forecast for GDP of 2%-3% in the year through June 2015, down from 2.25%-3.25% in the May projection. Following suit, the forecast for core inflation dropped from 1.75%-2.75%, down from 2.25%-3.25%. The RBA added that the unemployment rate was likely to "remain elevated for some time". Australia's unemployment rate, which jumped in July, leaped above the US rate for the first time since 2007. This underscores a divergence in monetary policy outlook between the two countries - the US is expected to raise rates next year, while the RBA is unlikely to take similar action if the economy doesn't improve. The RBA statement also took note of the high value of the Australian dollar, which has gained about 6% since February.

In the US, JOLTS Job Openings improved to 4.67 million, its third consecutive gain from the previous release. However, this fell short of expectations, as the estimate stood at 4.74 million. In the US, employment indicators are under the market microscope, as the strength of the labor market is one of the most important factors influencing the Federal Reserve regarding the timing of an interest rate hike. A rate increase is expected by mid-2015, but stronger economic data, especially on the employment front, could hasten a move by the Fed.

AUD/USD for Tuesday, August 12, 2014

AUD/USD August 12 at 14:45 GMT

AUD/USD 0.9264 H: 0.9273 L: 0.9247

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 has been range-bound throughout the day.
  • On the downside, 0.9229 remains an immediate support line. 0.9119 is stronger.
  • 0.9361 is a strong resistance line.
  • Current range: 0.9229 to 0.9361

Further levels in both directions:

  • Below: 0.9229, 0.9119, 0.9020 and 0.8916
  • Above: 0.9361, 0.9446, 0.9617 and 0.9757

OANDA's Open Positions Ratio

AUD/USD ratio is almost unchanged on Tuesday. This is consistent with the movement of the pair, as the Australian dollar has shown little activity. The ratio has a majority of long positions, indicative of trader bias towards the Australian dollar breaking out of range and moving to higher ground.

AUD/USD Fundamentals

  • 1:30 Australian NAB Business Confidence. Actual 11 points.
  • 1:30 Australian HPI. Estimate 1.1%. Actual 1.8%.
  • 11:30 US NFIB Small Business Index. Estimate 96.3 points. Actual 95.7 points.
  • 14:00 US JOLTS Job Openings. Estimate 4.74M. Actual 4.67M.
  • 18:00 US Federal Budget Balance. Estimate -98.2B.

* 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.