AUD/USD is showing little movement, continuing the trend we saw on Wednesday. In Thursday’s European session, the pair is trading just shy of the 0.94 line. In economic news, US Unemployment Claims was up slightly from the previous reading, but still beat the estimate. ISM Non-Manufacturing PMI will be released later today. The government shutdown continues, as Congress has been unable to reach an agreement to end the budget stalemate. There are no Australian releases on Thursday.
The US government remains paralyzed as the battle in Congress continues over the federal budget. With the government lacking funds to operate, it has been forced to close non-essential services and send almost a million government workers home. The Republicans and Democrats are entrenched in their positions, but public resentment may force the politicians to get their act together quickly. If things are resolved sometime this week, it will have been more of a nuisance than a crisis. However, a much more serious crisis could occur in two weeks if Congress doesn’t reach an agreement on raising the debt ceiling. If that happens, the Treasury would be unable to pay all of its bills, and the economic fallout could be tremendous. With all the bad blood between the Democrats and Republicans, reaching an agreement on the debt ceiling could prove a difficult task.
The Federal Reserve surprised the markets in September when it didn’t taper QE, and the next dates to circle are October 29- 30, when the Fed holds its next policy meeting. Employment data will be an important factor in the Fed’s decision later this month. This week’s employment numbers were mixed. ADP Non-Farm Employment Change did not impress in September. The indicator dropped from 176 thousand in August to 166 thousand in September, a four-month low. The estimate stood at 177 thousand. There was better news from Unemployment Claims, as the key indicator rose slightly to 308 thousand, but beat the forecast of 315 thousand. Due to the shutdown, Friday’s Non-Farm Employment Change release has been cancelled.
Australia released two key events on Wednesday, and both were disappointments. Building Approvals, known for its sharp fluctuations, declined by 4.7% in September, compared to a gain of 10.2% the month before. The markets had expected a loss of -0.7%. Meanwhile, the trade deficit widened to -$0.82 billion, its worst showing in seven months. The estimate stood at -$0.45 billion. Earlier in the week, the RBA maintained the key interest rate at 2.50%, where it has been since July. In its Rate Statement, the RBA left the door open for future cuts and reiterated that it would like to see a lower Australian dollar. 
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AUD/USD- AUD/USD is trading quietly on Thursday, as the proximate support and resistance levels (S1 and R1 above) remain intact.
- The pair is testing resistance at the round number of 0.9400. This is followed by stronger resistance at 0.9508.
- On the downside, the pair continues to receive support at 0.9328. This is a weak line which could face pressure if the Australian dollar loses ground. There is stronger support at 0.9221.
- Current range: 0.9328 to 0.9400
Further Levels
- Below: 0.9328, 0.9221, 0.9135, 0.9089 and 0.9000
- Above: 0.9400, 0.9508, 0.9613 and 0.9700
AUD/USD remains unchanged in Thursday trading, continuing the pattern we have seen since Tuesday. This is reflective of the pair’s movement, which is showing little activity.
The pair is trading quietly close to the 0.94 line. With the US due to release a key services PMI later today, we could see some movement from the pair if the release is not in line with market expectations.
AUD/USD Fundamentals
- 11:30 US Challenger Job Cuts.
- 12:30 US Unemployment Claims. Estimate 315K. Actual 308K.
- 14:00 US ISM Non-Manufacturing PMI. Estimate 57.2 points.
- 14:30 US Natural Gas Storage. Estimate 96B.
- 17:30 US FOMC Member Jerome Powell Speaks.
*All release times are GMT
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