AUD/USD

The Australian dollar was relatively steady during the holiday period and begins the new trading week in the mid-0.89 range. In economic news, Australian releases stated off the week with a whimper, as AIG Services Index dropped to 46.1 points, a four-month low. There are no Australian releases on Monday. The markets will be keeping a close eye on Trade Balance, which will be released early on Tuesday. Over in the US, today’s highlight is ISM Non-Manufacturing PMI. The markets are anticipating a slight improvement in the December release. As well, the Senate holds a vote on the nomination of Janet Yellen for head of the Federal Reserve, which is expected to pass easily.

US Unemployment Claims was almost identical to the previous week, coming in at 339 thousand. This was slightly above the estimate of 334 thousand. The markets will be keeping an eye on the year’s first Non-Farm Payrolls, which will be released next week. The NFP could impact on the next Fed decision regarding QE, after 2013 ended with QE tapering. While it was a small move, lowering asset purchases from $85 billion to $75 billion each month, the Fed did make a significant change its monetary policy, and this could have a significant positive impact on the US dollar. If US employment releases continue to look solid, we can expect further tapers in the near future, which could shake up the currency markets in favor of the US dollar.

On Friday, Federal Reserve Chair Bernard Bernanke gave a cautious thumbs-up to the US economy, saying that we could be in for a period of faster growth. Bernanke is winding up his eight years at the helm of the Fed, which included implementing a QE program in order to deal with a severe economic and financial crisis. The Fed has started to taper QE, with a cut of $10 billion to the $85 billion in assets which the Fed has been purchasing each month. The Fed will meet at the end of January, and another taper of $10 billion is a strong possibility. Meanwhile, Bernanke reiterated that the QE taper did not mean that interest rates would be increased.

AUD/USD for Monday, January 6, 2013

AUD/USD January 6 at 13:40 GMT

AUD/USD 0.8946 H: 0.8992 L: 0.8936

AUD/USD Technical

• AUD/USD has edged lower in Monday trading and is not showing much movement.
• On the upside, the next resistance line is at the round number of 0.9000. This is followed by resistance at 0.9119.
• On the downside, 0.8893 continues to provide support. The next support level is 0.8735, which has held firm since July 2010.
• Current range: 0.8893 to 0.9000

Further levels in both directions:

• Below: 0.8893, 0.8735, 0.8658, 0.8505 and 0.8411
• Above: 0.9000, 0.9119, 0.9229 and 0.9305

OANDA’s Open Positions Ratio

AUD/USD is made up of a substantial majority of long positions, reflecting a trader bias towards the Australian dollar moving higher against the US currency.

The pair has not shown much activity in Monday trading. We could see some stronger movement during the North American session as the US releases key PMI data later in the day.

AUD/USD Fundamentals

• 14:00 US Final Services PMI. Exp. 56.0 points.
• 15:00 US ISM Non-Manufacturing PMI. Exp. 54.6 points.
• 15:00 US Factory Orders. Exp. 1.8%.
• 22:30 US Fed Chairman Nomination Vote.

*Key releases are highlighted in bold

*All release times are GMT