AUD/USD falls to one-week lows on US economy outlook

Australian dollar traded close to lows unseen in one week against its US counterpart on Thursday, as Federal Reserve Bank trims its monthly asset purchases on improving economy.

AUD/USD reached a session low at 0.8879, also the pairs lowest point since December 20th, after which consolidation followed at 0.8888, down 0.40% for the day. Support was likely to be received at December 20th low, 0.8856, while resistance was to be met at December 24th high, 0.8934.

The Federal Reserve Bank said on December 18th that it intends to reduce its monthly bond purchases in January to $75 billion from $85 billion, while also reinforcing its position that the benchmark interest rate will remain low for an extended period of time. Bank’s policymakers will probably trim asset purchases in increments of $10 billion over the next seven meetings before ending the program in December 2014, according to economists in a Bloomberg News survey published on December 19th.

The number of initial jobless claims in the United States probably declined to 345 000 during the week ended on December 21st, according to the median estimate by economists, ahead of the release of the official report later in the day. The number of claims was 379 000 in the preceding week.

“We may see the U.S. jobless claims data move the market as traders in New York start to come back from holiday,” said Kengo Suzuki, the chief currency strategist at Mizuho Securities Co. in Tokyo, cited by Bloomberg. “Currency traders will keep an eye on stock moves today.”

Meanwhile, it became clear that durable goods orders in the United States rose 3.5% in November, supported by sectors such as aviation and transport. Experts had expected a lesser rate of increase, 2.0%. October’s durable goods orders result has been revised up to a drop of 0.7% from a drop of 2.0% previously.

Durable goods orders, excluding the volatile sector of transportation, climbed 1.2% in November, marking the strongest monthly pace since May.

Orders for core capital goods, a major gauge of business investment activity, surged 4.5% in November or the fastest pace since January, which spoke of increased economic sentiment in the country. Shipments of core capital goods, which are used to calculate quarterly Gross Domestic Product, increased 2.8% in November, significantly outstripping expectations for a 1.0% gain.

Elsewhere, the Aussie was lower against the euro, with EUR/AUD cross advancing 0.54% on a daily basis to trade at 1.5412 at 11:45 GMT. AUD/NZD pair was losing 0.08% to trade at 1.0893 at 11:47 GMT.

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