AUD/USD – Little Change as Inflation Expectations Stays Steady

AUD/USD is almost unchanged in Thursday’s European session, as the pair was trading in the mid-1.03 range. MI Inflation Expectations was up slightly, and had little impact on the pair. The markets are waiting for the release of US Unemployment Claims, which is today’s key release.

AUD/USD continues to drift, as it settles comfortably in the 1.0340 range. The pair did not react to the news that the BOJ had refrained from introducing further easing measures. However, the markets expect further measures to be taken, as Japanese inflation indicators continue to point to deflation, which the government has promised to stamp out. Thursday’s BOJ policy meeting was the final one chaired by Governor Masaaki Shirakawa, who leaves his post in March. Prime Minister Abe will be handpicking his successor, who is expected to tow the government’s line on monetary policy.

One reason why the BOJ may have decided to keep a low profile at this week’s policy meeting is the upcoming G-20 meeting. An important topic on the agenda will be the issue of exchange rates. There is mounting concern about currency wars, and Japan is coming under strong criticism for increasingly relying on monetary policy to kick-start its economy. The G-7, clearly concerned about the falling Japanese yen, reiterated its commitment to allowing the markets to determine exchange rates. The Institute of International Finance, which is comprised of leading banks and financial institutions, also weighed in on the matter. It urged the G-20 to take steps to avoid the “possible discord on exchange rates”. For its part, the Japanese government has defended its monetary policy, stating that its aggressive easing steps have been taken to combat deflation, and it has not actively devalued the yen. Japan’s trading partners may beg to differ, but we’re unlikely to see any fireworks at the G-20 over this matter. Given the need to reach a consensus, analysts expect any statement on currencies from the G-20 to be mild in nature.

 

AUD/USD for Thursday, February 14 2013

Forex Rate Graph Thursday, February 14, 2013

AUD/USD February 14 at 13:00 GMT

1.0356 H: 1.0365 L: 1.0326

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
1.0174 1.0268 1.0334 1.0424 1.0473 1.0530

 

AUD/USD continues to show little movement. The pair faces strong resistance at 1.0424. On the downside, there is support at  1.0334. This line has already been tested today, and could see further activity. It is followed by 1.0268, a strong support level.

Current range: 1.0334 to 1.0424

Further levels in both directions:

  • Below: 1.0334, 1.0268, 1.0174, 1.0031 and 0.9959 and 98.47
  • Above: 1.0424, 1.0473, 1.0530 and 1.0605

 

OANDA’s Open Position Ratios

The AUD/USD ratio continues to pointing to strong movement towards the short positions. We are not seeing this trend reflected in the currency pair, which continues to trade in a narrow range. The present activity in the ratio indicates an expectation that the US dollar will make inroads against the Aussie.

AUD/USD continues to drift, with little movement in either direction. Today’s key release, US Unemployment Sales, has the potential to be a market mover, so we could see some movement from the pair in today’s North American session.

 

AUD/USD Fundamentals

  • 00:00 Australian MI Inflation Expectations. Actual 2.2%.
  • 13:30 US Unemployment Claims. Estimate 361K.
  • 15:30 US FOMC Member Daniel Tarullo Speaks.
  • 15:30 US Natural Gas Storage. Estimate -166B.
  • 17:50 US FOMC Member James Bullard Speaks.
  • 18:00 US 30-year Bond Auction.

 

*Key releases are highlighted in bold

*All release times are GMT

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.