The Australian dollar continues to post gains on Wednesday, as AUD/USD trades at 0.7220 early in the North American session. On the release front, Australian GDP posted a gain of 0.6%, beating the forecast of 0.5%. We’ll get a look at Australian Trade Balance later on Wednesday. In the US, today’s key event is ADP Nonfarm Payrolls. The markets are expecting a reading of 185 thousand, which would be much lower than the previous reading of 205 thousand. The US will also release Crude Oil Inventories. Thursday brings additional employment data, with the publication of US unemployment claims. As well, Australia will release Retail Sales, a market-mover.
Australian GDP posted a gain of 0.6% in the fourth quarter, which beat expectations but was well below the Q3 reading of 0.9%. Still, GDP growth in 2015 was 2.4%, only marginally lower than the growth rate of 2.5% in 2014. Market sentiment remains positive towards the Aussie, which has gained 100 points this week. Next up is Trade Balance with the deficit expected to narrow to A$3.22 billion in the January report. Earlier this week, there were no surprises from the RBA, which held the benchmark rate at the round number of 2.00%. The RBA statement was optimistic but cautious in tone, noting that there was “reasonable prospects for continued growth” and that the employment picture had shown improvement. Will the RBA lower rates in 2016? The central bank continues to maintain its easing bias, and analysts believe that we will see at least one rate cut this year.
Weaker US fundamentals in early 2016 have dampened expectations about a rate hike by the Federal Reserve in March, as Fed policymakers have stated that economic conditions will have to improve before rates move higher. Some economists have predicted that the Fed will hold off from any further hikes until 2017. Meanwhile, January reports from the US housing sector are raising concerns. Housing Starts and Building Applications fell in January, and New Home Sales and Pending Home Sales followed suit, missing expectations. Activity in the housing sector is closely monitored by analysts, as a decrease in home building can have a negative impact on other sectors of the economy. The US manufacturing sector has also struggled, but there was positive news last week as Core Durable Goods Orders and Durable Goods Orders were much stronger than expected in January.
AUD/USD Fundamentals
Tuesday (March 1)
- 19:30 Australian GDP. Estimate 0.5%. Actual 0.6%
Upcoming Key Events
Wednesday (March 2)
- 8:15 US ADP Non-Farm Employment Change. Estimate 185K
- 10:30 US Crude Oil Inventories. Estimate 2.5M
- 14:00 US Beige Book
- 17:30 Australian AIG Services Index
- 19:30 Australian Trade Balance. Estimate -3.22B
Upcoming Key Events
Thursday (March 3)
- 8:30 US Unemployment Claims. Estimate 271K
- 10:00 US ISM Non-Manufacturing PMI. Estimate 49.8 points
- 19:30 Australian Trade Balance. Estimate 0.4%
*Key releases are highlighted in bold
*All release times are EST
AUD/USD for Wednesday, March 2, 2016
AUD/USD March 2 at 9:20 EST
AUD/USD Open: 0.7181 Low: 0.7166 High: 0.7243 Close: 0.7220
AUD/USD Technicals
| S3 | S2 | S1 | R1 | R2 | R3 |
| 0.7012 | 0.7100 | 0.7213 | 0.7385 | 0.7440 | 0.7533 |
- 0.7213 remains busy and has switched to a support role. It is a weak line
- 0.7385 is a strong resistance line
- Current range: 0.7213 to 0.7385
Further levels in both directions:
- Below: 0.7213, 0.7100, 0.7012 and 0.6931
- Above: 0.7385, 7440 and 0.7533
OANDA’s Open Positions Ratio
The AUD/USD ratio has shown movement towards short positions, consistent with AUD/USD posting gains and covering long positions. Short positions have a slight majority (53%), which is indicative of trader bias towards AUD/USD reversing directions and moving lower.