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Wednesday, November 05, 2014

AUD/USD – Sliding Aussie Slips to 4-year Lows

AUD/USD has posted sharp losses on Wednesday, as the pair trades below the 0.86 line in the North American session. The Aussie has been unable to find its footing and finds itself at its lowest level since July 2010.
Since the start of September, the currency has shed over 700 points against its US counterpart. Will the bleeding continue? In the US, ADP Nonfarm Employment Change climbed to 230 thousand, well above expectations. As well, ISM Non-Manufacturing PMI softened, posting a reading of 57.1 points. There are no Australian releases on Wednesday, but we’ll get a look at Employment Change early on Thursday. The markets are expecting a strong turnaround in the October reading, with an estimate of 10.2 thousand.
US job numbers have been solid in recent readings, and the trend continued with ADP Nonfarm Payrolls on Wednesday. The key indicator climbed to 230 thousand, easily beating the estimate of 214 thousand. This marked the indicator’s strongest showing in 2014. We’ll get a look at Unemployment Claims and the official Nonfarm Payrolls later in the week. Meanwhile, the ISM Non-Manufacturing PMI slipped for a second straight month, falling to 57.1 points, shy of the estimate of 589.2 points. This marked a four-month low for the PMI.
Earlier in the week, there were no surprises from the RBA, which held rates at 2.50%. This marked the 15th straight month that the rates have stayed on hold, as the RBA is reluctant to tinker with the benchmark rate, which is considered low by Australian standards. The central bank took its customary shot at the Australian dollar, noting that the currency remains “above most estimates of its fundamental value”. Although the Aussie continues to trade close to its 2014 lows, the RBA is firmly of the opinion that the currency continues to weigh on the economy.
AUD/USD for Wednesday, November 5, 2014

AUD/USD November 5 at 16:10 GMT
AUD/USD 0.8589 H: 0.8755 L: 0.8565

AUD/USD Technical
S3 S2 S1 R1 R2 R3
0.8315 0.8456 0.8550 0.8668 0.8763 0.8820

  • AUD/USD weakened in the Asian session and the downward trend has continued in the European and North American sessions.
  • 0.8668 has reverted to a resistance role as the Aussie continues to post sharp losses. 0.8763 is next.
  • 0.8550 is a weak support level. 0.8456 is stronger.
  • Current range: 0.8668 to 0.8763.
Further levels in both directions:
  • Below: 0.8550, 0.8456, 0.8315 and 0.8240
  • Above: 0.8668, 0.8763, 0.8820, 0.8953 and 0.9020

OANDA’s Open Positions Ratio
AUD/USD ratio is pointing to gains in long positions on Wednesday, continuing the direction seen a day earlier. This is not consistent with what we’re seeing from the pair, as the Australian dollar has posted sharp losses. The ratio has a majority of long positions, indicative of trader bias towards AUD/USD reversing directions and moving higher.

AUD/USD Fundamentals
  • 13:15 US ADP Non-Farm Employment Change. Estimate 214K. Actual 230K
  • 14:15 US FOMC Member Narayana Kocherlakota Speaks.
  • 14:45 US Final Services PMI. Estimate 57.3 points. Actual 57.1 points.
  • 15:00 US ISM Non-Manufacturing PMI. Estimate 58.2 points.
  • 15:30 US Crude Oil Inventories. Estimate 1.8M.
  • 23:50 BoJ Monetary Policy Meeting Minutes.
* Key releases are highlighted in bold
*All release times are GMT

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