The Australian dollar has posted strong gains on Wednesday, as AUD/USD trades at 0.7490 in the North American session. On the release front, Australian Westpac Consumer Sentiment posted a weak reading of -2.2%. We’ll get a look at MI Inflation Expectations later on Wednesday. In the US, today’s highlight is Crude Oil Inventories. Wholesale Inventories posted a gain of 0.3%, beating expectations.
March has been kind to the Aussie, which has surged 350 points. AUD/USD is knocking on the door of the 0.75 line, its highest level since July 2015. The currency has struggled in recent months, hard hit by the China slowdown and uncertainty in the markets with the plunge in oil prices. However, the pair has rebounded back with a vengeance as oil prices have improved, global markets have steadied, and investors appear to be more comfortable holding risk assets like the Aussie. NAB Business Confidence edged up to 3 points, up from 2 points a month earlier. Consumer confidence could not keep up, as Westpac Consumer Sentiment slipped 2.2%, compared to a 4.2% gain a month earlier. The RBA continues to maintain an easing bias, and this week Deputy Governor Philip Lowe stated that this policy is unlikely to change, noting that weak wage growth continues to weigh on inflation levels.
A strong US Nonfarm Payrolls is often bullish for the US dollar, but an excellent January report failed to buoy the greenback against its major rivals late last week. The indicator impressed with a reading of 242 thousand, much higher than the estimate of 195 thousand. This was much stronger than the previous (revised) reading of 171 thousand. The US economy has added an average of 225,000 jobs per month since December, an impressive number considering that the economy has softened in the early part of 2016. Why then, did a stellar NFP release not impress the markets? The reason was that wage growth, which has consistently lagged behind other employment indicators, surprised the markets with a decline of 0.1% in January, the first drop in wages since December 2014. This indicator is closely linked to inflation, since an increase in wages means workers have more money to spend. The indicator’s decline means that that Federal Reserve’s inflation target of about 2.0% remains far off, so the Fed, which is keeping a close eye on the weak inflation picture, is unlikely to press the rate trigger at its policy meeting later this month.
AUD/USD Fundamentals
Tuesday (March 8)
- 18:30 Australian Westpac Consumer Sentiment. Actual -2.2%
Wednesday (March 9)
- 10:00 US Wholesale Inventories. Estimate -0.2%. Actual 0.3%
- 10:30 US Crude Oil Inventories. Estimate 3.0M
- 13:01 US 10-year Bond Auction
- 19:00 Australian MI Inflation Expectations
*Key releases are highlighted in bold
*All release times are EST
AUD/USD for Wednesday, March 9, 2016
AUD/USD March 9 at 10:00 EST
AUD/USD Open: 0.7432 Low: 0.7411 High: 0.7510 Close: 0.7506
AUD/USD Technicals
| S3 | S2 | S1 | R1 | R2 | R3 |
| 0.7213 | 0.7385 | 0.7472 | 0.7560 | 0.7678 | 0.7796 |
- AUD/USD was flat in the Asian session. The pair posted gains in European trade and continues to move upwards in the North American session
- 0.7472 has switched to a support level following strong gains by AUD/USD. It is a weak line
- There is resistance at 0.7560
- Current range: 0.7472 to 0.7560
Further levels in both directions:
- Below: 0.7472, 0.7385, 0.7213 and 0.7100
- Above: 0.7560, 0.7678 and 0.7796
OANDA’s Open Positions Ratio
The AUD/USD ratio has shown slight movement towards long positions, which have a majority (56%). This is indicative of trader bias towards AUD/USD continuing to move higher.