The Australian dollar's miseries continue, as AUD/USD has lost more ground on Friday. In the European session, the pair is trading in the mid-0.90 range, its lower level since March. The Aussie has had a dismal week, surrendering over 300 points. There are no Australian releases on Friday. In the US, it's a busy day with the release of three major events -- Retail Sales, Core Retail Sales and UoM Consumer Sentiment.
US employment data continues to disappoint, as concerns increase regarding the health of the US job market. Unemployment Claims rose to 315 thousand, the largest number of claims in 10 weeks. The reading was much higher than the estimate of 306 thousand. This follows soft numbers from JOLTS Job Openings and a dismal Nonfarm Payrolls last week. The troubling job numbers are unlikely to affect the Fed's plan to continue trimming QE next week, but a weak labor market could postpone plans to raise interest rates by mid-2015.
Australian employment numbers made headlines on Thursday, as Employment Change posted an incredible gain of 121,000 last month, crushing the estimate of 15,000. The markets are having some difficulty accepting these stratospheric figures at face value, with one Australian analyst noting that the numbers are "somewhat difficult to interpret". The Australian statistics bureau claimed that a rotation in its survey group affected the August figures, and we're likely to hear more about the authenticity of these numbers in the next few days. There were no doubts about the veracity of the unemployment rate, which dipped to 6.1%, beating the estimate of 6.3%. The Aussie posted gains after the employment releases but then retracted and continued to head southward.
Confidence in the Australian economy appears to be waning, according to the latest business and consumer confidence data. Westpac Consumer Sentiment had been steadily improving, but the upswing came to a crashing halt as the indicator slipped by 4.6% in August. This marked a 4-month low. Earlier this week, NAB Business Confidence, a key indicator, slipped to 8 points in August, compared to 11 points a month earlier. Weak business and consumer confidence in Australia's economy could translate into decreased spending by consumers and businesses, which would be grim news for the weak economy.
The Australian dollar is sensitive to key Chinese releases, as China is Australia's biggest trading partner. Chinese Trade Balance hit a record high in August, as the surplus climbed 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. On Thursday, Chinese CPI came in at 2.0%, as the index fell to a 4-month low.
AUD/USD September 12 at 12:55 GMT
- AUD/USD 0.9054 H: 0.9099 L: 0.9043
AUD/USD Technicals
| S3 | S2 | S1 | R1 | R2 | R3 |
| 0.8820 | 0.8953 | 0.9020 | 0.9119 | 0.9229 | 0.9361 |
- AUD/USD lost ground in the Asian session, dropping below the 0.91 line. The pair is unchanged in European trading.
- 0.9020 has weakened and is an immediate support level. 0.8953 is stronger.
- On the upside, 0.9119 has some breathing room as the Aussie continues to lose ground. 0.9229 is stronger.
- Current range: 0.9020 to 0.9119
Further levels in both directions:
- Below: 0.9020, 0.8953, 0.8820 and 0.8860
- Above: 0.9119, 0.9229, 0.9361, 0.9446 and 0.9617
OANDA's Open Positions Ratio
AUD/USD ratio is pointing to gains in long positions on Friday, reversing the direction seen a day earlier. This is not consistent with the pair's movement, as the Australian dollar continues to lose ground. The ratio continues to have a majority of long positions, indicative of trader bias towards the Australian dollar reversing directions and moving higher.
AUD/USD Fundamentals
- 12:30 US Core Retail Sales. Estimate 0.2%.
- 12:30 US Retail Sales. Estimate 0.3%.
- 12:30 US Import Prices. Estimate -0.8%.
- 13:55 US Preliminary UoM Consumer Sentiment. Estimate 83.2 points.
- 13:55 US Preliminary UoM Inflation Expectations.
- 14:00 US Business Inventories. Estimate 0.5%.