AUD/USD - Aussie Posts Gains On Strong Business Confidence Report

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Includes: FXA, UDN, UUP
by: Dean Popplewell

By Kenny Fisher

The Australian dollar has posted considerable gains on Tuesday, continuing the upward movement which started late last week. AUD/USD is trading at 0.7660 in the European session. In economic news, Australian NAB Business Confidence surged to 6 points in March. Later on Tuesday, Australia releases Westpac Consumer Sentiment. In the US, it’s an uneventful day, with no major releases on the schedule. The markets will have plenty of data to sift through on Wednesday. The US releases retail sales and PPI, while Australia will publish Employment Change and the unemployment rate.

The Aussie has pushed across the 0.76 level, and has gained 140 points since Friday. The currency received a boost on Tuesday, after positive news from NAB Business Confidence. The indicator jumped to 6 points in March, compared to 3 points a month earlier. This marked the indicator’s strongest showing since June 2015. Will Westpac Consumer Sentiment follow suit with a strong release on Tuesday? The indicator disappointed in March, posting a decline of 2.2%. Consumer confidence data is closely watched, as stronger consumer confidence usually translates into more consumer spending, which is critical for economic growth.

The Federal Reserve has poured cold water on recent speculation that an April rate hike was on the table. In a speech last week, Fed chair Janet Yellen acknowledged that although domestic growth was steady, the US economy remained prone to risks due to turbulent conditions in the global economy. New York Federal Reserve president William Dudley reiterated Yellen’s message, saying that the Fed must approach future rate hikes with caution. The Fed released the minutes of its March policy meeting last week, and the tone was more dovish than expected, although some members did express support for an April hike. The minutes also pointed to a split as to whether the recent pickup in inflation will continue. Higher inflation levels would increase the likelihood of a rate hike in June. Most analysts are expecting no more than two rate hikes in 2016, although stronger than expected economic data could change this forecast.

AUD/USD Fundamentals

Monday (April 11)

  • 21:30 Australian NAB Business Confidence. Actual 6 points

Tuesday (April 12)

  • 6:00 US NFIB Small Business Index. Estimate 93.9
  • 8:30 US Import Prices. Estimate 1.0%
  • 14:00 US Federal Budget Balance. Estimate -106.5B
  • 20:30 Australian Westpac Consumer Sentiment

Upcoming Key Events

Wednesday (April 13)

  • 12:30 US Core Retail Sales. Estimate 0.4%
  • 12:30 US PPI. Estimate 0.3%
  • 12:30 US Retail Sales. Estimate 0.1%
  • 21:30 Australian Employment Change. Estimate 18.6K
  • 21:30 Australian Unemployment Rate. Estimate 5.9%

*All release times are DST

AUD/USD for Tuesday, April 12, 2016

AUD/USD April 12 at 8:00 DST

Open: 0.7592 Low: 0.7582 High: 0.7672 Close: 0.7660

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.7385 0.7472 0.7560 0.7678 0.7796 0.7913
Click to enlarge
  • AUD/USD has posted gains in the Asian and European sessions
  • 0.7678 is under pressure in resistance and could break in the North American session
  • 0.7560 has strengthened in support as AUD/USD has posted gains on Tuesday
  • Current range: 0.7560 to 0.7678

Further levels in both directions:

  • Below: 0.7560, 0.7472, 0.7385 and 0.7213
  • Above: 0.7678, 0.7796 and 0.7913

OANDA’s Open Positions Ratio

The AUD/USD ratio has shown little movement this week. Short and long positions are close to evenly split, indicative of a lack of trader bias as to which direction the pair will take next.

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.