Market Overview

AUD/USD – Steady as Markets Await Bernanke Speech

AUD/USD is steady as we begin the new trading week. The pair looked sharp last week, and took advantage of strong Chinese data as it tested the 1.06 line. Currently, the pair is trading in the 1.0560 range. The markets will be closely listening as Fed Chair Bernard Bernanke speaks on Monday. In Australia, ANZ Job Advertisements were a major disappointment, falling sharply in last month.

The Australian dollar got a welcome boost late last week from a pair of Chinese releases on Friday. The Chinese Trade Surplus surprised the markets, posting an outstanding reading of $31.6 billion. This easily beat the market forecast of $20.1 billion. Chinese CPI was also robust, as the key inflation index jumped 2.5%, beating the estimate of 2.3%. Both indicators point to stronger growth in the Chinese economy. This helped bolster the Aussie, as China is Australia's most important trading partner. The excellent Chinese numbers helped offset some weak Australian data, as Building Approvals and Retail Sales both were well below the estimate.

The markets will be all ears as Federal Chairman Bernard Bernanke speaks at the University of Michigan in Ann Arbor. Bernanke will discuss monetary policy and the state of the global economy in his remarks. Analysts are hoping to glean some clues with regard to a possible end date for the Federal Reserve's current QE program. Although the Fed has not set a deadline for the end of QE, there has been speculation that the program could end sometime in 2013. This could have major ramifications for the US dollar, since QE is dollar-negative, so an early end to the program would be bullish for the greenback.

In economic news, US released Trade Balance numbers on Friday. The numbers caught the markets off guard, as the Trade Deficit ballooned last month, posting a deficit of $48.7 billion. This was way above the estimate of $41.1 billion, and represented the highest deficit levels since April. The figures indicate a strong demand for imports by US consumers, a sign of greater consumer spending. Increased consumer confidence and spending is a critical engine for economic growth, but whether the recovery has taken hold and the US economy is headed in the right direction is not at all certain.

There are worrying signs, with the staggering US debt still out of control and stubbornly high unemployment. The fiscal cliff has been averted for now, but the Republicans and Democrats will again have to work together in Congress and make decisions about spending cuts and the debt ceiling. In Australia, MI Inflation Gauge surprised the markets with a 0.4% gain. This was the index's highest level since September. ANZ Job Advertisements, an important employment indicator, declined 3.8%, last month. This was a sharp drop, and underscores concerns about the employment situation. Home Loans also was a disappointment, falling 0.5%. The markets had anticipated a 0.5% gain. There are no releases out of the US on Monday. However, Tuesday will be busy, with three key releases – Core Retail Sales, PPI and Retail Sales.

AUD/USD for Monday, January 14, 2013

AUD/USD January 14 at 13:10 GMT

1.0566 H: 1.0577 L: 1.0522

AUD/USD Technical

S3 S2 S1 R1 R2 R3
1.0376 1.0424 1.0508 1.0568 1.0605 1.0718

In Monday's Asian session, AUD/USD moved higher and consolidated at 1.0557. The pair has been steady in the European session, and continues to put pressure on resistance at 1.0568. This is followed by the resistance line of 1.0605. On the downside, the pair is receiving support at 1.0508.

Current range: 1.0508 to 1.0568.

Further levels in both directions:

• Below: 1.0508, 1.0424, 1.0376, 1.0334, 1.0230 and 1.0174.
• Above: 1.0568, 1.0605, 1.0718, 1.0874 and 1.0961.

OANDA's Open Position Ratios

The AUD/USD ratio continues to show a shift towards short positions. This points to an expectation that the Aussie will weaken against its US counterpart. However, the long position component is still quite strong.

The Australian dollar was very busy last week, and managed to test the 1.06 line. The activity has subsided as we start the new trading week, as the pair appears comfortable in the mid-1.05 range.

AUD/USD Fundamentals

• 00:30 Australian ANZ Job Advertisements. Actual -3.8%
• 00:30 Australian Home Loans. Estimate 0.5%. Actual -0.5%
• 1:20 US FOMC Member Charles Evan Speaks
• 21:00 US Fed Chairman Bernard Bernanke Speaks at University of Michigan in Ann Arbor

*Key releases are highlighted in bold
*All release times are GMT

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