AUD/USD – Aussie Shrugs Off Dismal Building Approvals

AUD/USD is showing little movement on Wednesday, continuing the trend we've seen throughout the week. Early in the North American session, the pair is trading in the mid-0.92 range. In economic news, Australian Building Permits dropped sharply, slumping to an eight-month low. Australian AIG Services Index will be released later in the day. Over in the US, ADP Nonfarm Employment Change looked sharp, posting a strong gain in February.

The first US employment release of the week met high expectations, as ADP Nonfarm Payrolls jumped to 191 thousand, up from 139 thousand a month earlier. This practically matched the estimate of 192 thousand. The markets will get a good look at the US employment picture in the next few days, with Unemployment Claims, the Unemployment Rate and NFP still to come.

Australian Building Permits looked awful, plunging by 5.0%, compared to a gain of 6.8% a month earlier. The estimate stood at -1.7%. The key indicator is notorious for strong fluctuations, which of often in estimates that are way off the mark. Meanwhile, the RBA maintained the benchmark interest rate at 2.50%, where it has been pegged since last August. RBA Governor Glenn Stevens took a swipe at the Aussie, saying that the high value of the currency in the past few months was not good for economic growth. After the rate decision, the Australian dollar briefly pushed above the 0.93 line, its highest level in four months. Last week, Stevens said that interest rates are unlikely to rise in 2014, as the RBA tries to boost consumer spending and residential construction.

Earlier in the week, Fed chair Janet Yellen said that inflation and employment levels needed to improve considerably, and the Federal Reserve would continue to provide monetary stimulus for some time. Currently, the Fed is purchasing $55 billion in assets under its QE scheme. There have been three tapers to QE so far, and Yellen plans to wind up the program in the fall, provided that the US economy does not run into any serious turbulence. At the same time, the Federal Reserve has stated that it has no plans to raise interest rates until sometime in 2015.

AUD/USD 0.9249 H: 0.9364 L: 0.9223