The Australian dollar has started off the trading week quietly, as AUD/USD trades at 0.7120 in the North American session. On the release front, the week started with Australian Company Operating Profits recording a sharp drop of 2.8 percent, missing expectations. On Monday, Australia releases Building Approvals and the RBA will issue a rate statement. In the US, there are just two releases – Chicago PMI and Pending Home Sales. There are two key events on Tuesday – US ISM Manufacturing PMI and Australian GDP.
Australian company profits looked weak in the fourth quarter, sliding 2.8 percent. This was much worse than the estimate of -1.7 percent. The markets are braced for a weak release from Building Permits, with an estimate of -2.9%. Meanwhile, the RBA is not expected to make any cuts to the benchmark rate, which currently stands at 2.00%. However, the RBA has maintained an easing bias, and any hints in the RBA rate statement about a cut in rates could push the Australian currency to lower levels.
It’s been a slow start in 2016 for the US economy, with soft growth and employment numbers in comparison with the red-hot numbers which characterized the second half of 2015. One sector which has been struggling badly is the manufacturing industry. The US economy has been grappling with a downturn in global demand, which has taken its toll on the export and manufacturing sectors. A strong US dollar, which has posted broad gains in recent months, has only exacerbated the situation. However, there was some positive news late in the week. US Preliminary GDP posted a strong gain of 1.0%, well above the estimate of 0.4%. There was also positive news from the manufacturing sector, as durable goods sparkled. Core Durable Goods rose 1.8%, crushing the estimate of 0.2%. This marked the key indicator’s strongest showing since March 2014. Durable Goods Orders followed suit with a sharp rise of 4.9%, rebounding from the previous reading of -5.1%. This was stronger than the estimate of 3.0%. Meanwhile, housing numbers have not impressed, as New Home Sales slipped to 494 thousand in January, compared to 544 thousand a month earlier. This figure was well short of the estimate of 522 thousand. Pending Home Sales will be released later on Monday, with the markets expecting a gain of 0.6%. If this housing release also misses expectations, the US dollar could respond with losses.
AUD/USD Fundamentals
Sunday (Feb. 28)
- 19:30 Australian Company Operating Profits. Estimate -1.7%. Actual -2.8%
Monday (Feb. 29)
- 9:45 US Chicago PMI. Estimate 52.1 points
- 10:00 US Pending Home Sales. Estimate 0.6%
- 17:30 Australian AIG Manufacturing Index
- 19:30 Australian Building Approvals. Estimate -2.9%
- 19:30 Australian Current Account. Estimate -19.8B
- 22:30 Australian Cash Rate. Estimate 2.00%
- 22:30 Australian RBA Rate Statement
- 23:30 US FOMC Member William Dudley Speaks
Upcoming Key Events
Tuesday (Mar. 1)
- 10:00 US ISM Manufacturing PMI. Estimate 48.5 points
- 19:30 Australian GDP. Estimate 0.5%
*Key releases are highlighted in bold
*All release times are EST
AUD/USD for Monday, February 29, 2016
AUD/USD February 29 at 9:10 EST
AUD/USD Open: 0.7127 Low: 0.7107 High: 0.7167 Close: 0.7122
AUD/USD Technicals
| S3 | S2 | S1 | R1 | R2 | R3 |
| 0.6931 | 0.7012 | 0.7100 | 0.7213 | 0.7385 | 0.7440 |
- There is resistance at 0.7213
- The round number of 0.71 is a weak support line
- Current range: 0.7100 to 0.7213
Further levels in both directions:
- Below: 0.7100, 0.7012 and 0.6931
- Above: 0.7213, 0.7385, 7440 and 0.7533
OANDA’s Open Positions Ratio
The AUD/USD ratio is showing long positions with a majority (54%). This is indicative of trader bias towards AUD/USD moving upwards.