Aussie Slide Continues As Business Confidence Softens
MarketPulse | Sep 09, 2014 11:19AM ET
AUD/USD continues to point southward, as the pair trades at the 0.92 line in Tuesday's North American session. The Australian dollar lost ground in response to a weak showing from Australian NAB Business Confidence, which dropped to 8 points in August. Australian Home Loans posted a weak gain of 0.3%. In the US, JOLTS Job Openings was unchanged and fell short of the estimate.
NAB Business Confidence, a key indicator, slipped to 8 points in August, compared to 11 points a month earlier. Business sentiment is a key component of economic growth, and lower business confidence in Australia's economy could translate into decreased spending and hiring. We'll get a look at Westpac Consumer Sentiment on Wednesday. The indicator has been on an impressive upswing in recent months. Meanwhile, Australian Home Loans was a disappointment, with a gain of 0.3%. This was well shy of the estimate of 1.1%.
The Australian dollar is sensitive to key Chinese releases, as China is Australia's biggest trading partner. Chinese trade surplus hit a record high in August, climbing to $49.8 billion, easily beating the estimate of $40.8 billion. Stronger Chinese exports should translate into increased demand for Australian raw materials, which bodes well for the Australian export sector and the Aussie. We'll get a look at additional key Chinese numbers during the week, with the release of CPI and Industrial Production. The Australian dollar could gain ground if these releases beat expectations.
US numbers continue to point to a deepening recovery, but the labor market is showing some signs of trouble. JOLTS Job Openings was unchanged in August at 4.67 million, short of the estimate of 4.72 million. On Friday, the eagerly-anticipated Nonfarm Employment Change crashed to 142 thousand, its lowest gain since January. This surprised the markets, which had expected a gain of 226 thousand. The disappointing release follows a weak ADP Nonfarm Payrolls report as well as a rise in unemployment claims.
- AUD/USD 0.9213 H: 0.9288 L: 0.9188
AUD/USD Technicals
| S3 | S2 | S1 | R1 | R2 | R3 |
| 0.8953 | 0.9020 | 0.9119 | 0.9229 | 0.9361 | 0.9446 |
- AUD/USD moved lower in the Asian session but bounced back up. The pair has lost ground in the European session and the dollar remains under pressure in North American trade.
- 0.9119 is providing strong support. This line has held firm since March.
- 0.9229 has reverted to a resistance role as the Australian dollar continues to lose ground. 0.9361is stronger.
- Current range: 0.9119 to 0.9229
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Further levels in both directions:
- Below: 0.9119, 0.9020, 0.8953 and 0.8820
- Above: 0.9229, 0.9361, 0.9446 and 0.9617
OANDA's Open Positions Ratio
AUD/USD ratio is pointing to strong gains in long positions on Tuesday. This is a direct result of sharp losses by AUD/USD, as this has resulted in the covering of short positions, leading to a greater percentage of long positions. The ratio has a strong majority of long positions, indicative of strong trader bias towards the Australian dollar reversing directions and moving higher.
AUD/USD Fundamentals
- 1:30 Australian NAB Business Confidence. Actual 8 points.
- 1:30 Australian Home Loans. Estimate 0.3%. Actual 1.1%.
- 11:30 US NFIB Small Business Index. Estimate 95.9 points. Actual 96.1 points.
- 14:00 US JOLTS Job Openings. Estimate 4.72M. Actual 4.67M.
- 14:00 US FOMC Member Daniel Tarullo Speaks.
* Key releases are highlighted in bold
*All release times are GMT
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