The Australian dollar continues to lose ground in Wednesday trading. AUD/USD has fallen to the 0.9570 range early in the North American session. The Aussie took a hit as Australian GDP came in short of the estimate, disappointing the markets. The Australian dollar has slumped badly, shedding close to two cents since Tuesday. The news was not good out of the US either, as ADP Non-Farm Employment Change was well below its estimate. Wednesday’s other highlight, the US ISM Non-Manufacturing PMI, will be released later today.
The Aussie continues on its unhappy southward journey, losing more ground on Wednesday after a disappointing Australian GDP. GDP gained a respectable 0.6% in Q1, but fell short of the 0.8% expectation. As one of the most important indicators, GDP showed once again that it is a market-mover, and the Australian dollar has lost close to one cent since its release.
The RBA did not have any surprises up its sleeve this time, and maintained the key interest rate at 2.75%. This was widely expected by the markets, but the Aussie still took a hit. The reason? The RBA was very clear in stating that there is room for further cuts. RBA Governor Glenn Stevens noted that the “inflation outlook, as currently assessed, may provide some scope for further easing, should that be required.” The central bank has kept an easing bias in place, and we could see another cut in August, following the release of inflation numbers in late July.
In the US, another key indicator posted a weak reading, as ADP Non-Farm Employment Change rose to 135 thousand, but was way off the forecast of 171 thousand. This was the third consecutive release to miss expectations, and will likely raise concerns about the extent of the US recovery. There has been a lot of speculation about whether the US Federal Reserve will scale back its quantitative easing program, but the Fed is unlikely to take action if the US employment picture remains problematic.
AUD/USD June 5 at 13:40 GMT
AUD/USD 0.9551 H: 0.9648 L: 0.9548
AUD/USD continues to lose ground in Wednesday trading. On the upside, the pair faces resistance at 0.9651. This line has strengthened as the pair trades at lower levels. On the downside, the pair is testing support at 0.9541. This line could fall if the Aussie continues to sag. There is a stronger support level at 0.9405.
- Current range: 0.9541 to 0.9651
Further levels in both directions:
- Below: 0.9541, 0.9405, 93.28 and 92.21
- Above: o.9651, 0.9727, 0.9795, 0.9907 and 1.00
AUD/USD ratio continues to point to movement towards long positions in the Wednesday session. As a result of the Aussie’s sharp losses this week, short positions are being covered, resulting in the movement we are seeing in the ratio, which is overwhelmingly made up of long positions.
The Australian dollar continues to struggle, and has posted sharp drops this week. Will the downward trend continue? Australia releases Trade Balance early on Thursday, and this market-mover could result in more volatility from AUD/USD.
AUD/USD Fundamentals
- 1:30 Australian GDP. Estimate 0.8%. Actual 0.6%
- 12:15 US ADP Non-Farm Employment Change. Estimate 171K. Actual 135K
- 12:30 US Revised Non-Farm Productivity. Estimate 0.7%. Actual 0.5%
- 12:30 US Revised Unit Labor Costs. Estimate 0.5%. Actual -4.3%
- 14:00 US ISM Non-Manufacturing PMI. Estimate 53.4 points.
- 14:00 US Factory Orders. Estimate 1.6%.
- 14:30 US Crude Oil Inventories. Estimate -0.8M.
- 18:00 US Beige Book.