The Australian dollar has kicked off the week with sharp losses on Monday, as AUD/USD trades at 0.7630. In Australia, Building Approvals posted a gain of 3.1%, but Retail Sales disappointed with a reading of 0.0%. It’s a quiet start to the week in the US, with no major releases. On Tuesday, Australia releases Trade Balance and the Cash Rate. The US will release ISM Non-Manufacturing PMI.
The Aussie slipped 150 points on Monday, as Retail Sales, the primary gauge of consumer spending, missed expectations. The indicator posted a flat reading of 0.0% for the second time in three months and missed the estimate of 0.4%. These weak numbers point to weak consumer demand, which could be detrimental to an economy which has struggled due to the Chinese slowdown and weak global conditions. Market focus will now shift to the RBA, which is expected to maintain the benchmark rate at 2.00% when it makes it rate announcement on Tuesday.
The US labor market remains robust, as underscored by Friday’s employment numbers. Nonfarm Payrolls came in at 215 thousand, above the estimate of 205 thousand. The unemployment rate edged up to 5.0%. Average Hourly Earnings posted a small gain of 0.3%, ahead of the estimate of 0.2%. Still, the positive job numbers didn’t help the US dollar gain any ground on Friday.
The US dollar was broadly lower last week, and the Aussie took advantage, gaining 170 points. The greenback sagged after Janet Yellen’s very dovish comments last week at a speech in New York. Yellen warned of risks to the US economy from uncertainty in the global markets and the slowdown in China, and poured cold water on speculation of an April rate hike. With the US economy in good shape, why did Yellen sound ultra-dovish in her comments? Yellen was likely reacting to comments by several Fed members prior to her speech, which were very hawkish in tone, some going as far as calling for a rate hike this month. The contradictory messages coming out of Fed points to a split in the FOMC concerning monetary policy, although Yellen is likely to have the last word. Mixed messages out of the Fed creates uncertainty that the markets could do without, so analysts will be paying close attention to the Fed minutes on Wednesday, looking for clues as to further rate projections. Traders should be prepared for some volatility after the release of the minutes.
AUD/USD Fundamentals
Monday (April 4)
- 1:00 Australian MI Inflation Gauge. Actual 0.0%
- 1:30 Australian Building Approvals. Estimate 2.1%. Actual 3.1%
- 1:30 Australian Retail Sales. Estimate 0.4%. Actual 0.0%
- 1:30 Australian ANZ Job Advertisements. Actual 0.2%
- 14:00 US Factory Orders. Actual -1.5%
- 14:00 US Labor Market Conditions Index
- 23:30 Australian AIG Services Index
Upcoming Key Events
Tuesday (April 5)
- 1:30 Australian Trade Balance. Estimate -2.55B
- 4:30 Australian Cash Rate. Estimate 2.00%
- 14:00 US ISM Non-Manufacturing PMI. Estimate 54.1 points
*All release times are DST
AUD/USD for Monday, April 4, 2016
AUD/USD April 4 at 7:50 DST
Open: 0.7666 Low: 0.7603 High: 0.7673 Close: 0.7627
AUD/USD Technical
| S3 | S2 | S1 | R1 | R2 | R3 |
| 0.7385 | 0.7472 | 0.7560 | 0.7678 | 0.7796 | 0.7913 |
- AUD/USD has posted slight losses in the Asian and European sessions
- There is resistance at 0.7678
- 0.7560 is providing support
- 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 is unchanged at the start of the week. Short positions have a majority (55%), indicative of trader bias towards AUD/USD losing ground.