AUD/USD is off to a very quiet start in Monday trading, as the pair trades just above the 0.90 line in the European session. It’s a very light schedule as we start off the new trading week, highlighted by US Core Durable Goods Orders. There are no Australian releases on Monday.
When will the US Federal Reserve scale down QE? That is the million dollar question which continues to preoccupy the markets. The release last week of the FOMC didn’t provide any hints, but appeared to confirm that QE tapering is a question of “when” rather than “if”. The minutes showed that Fed policymakers favor scaling back the bond-buying program, but are divided on the timing of such a move. The policymakers stated that recent US economic data was “mixed”, and all members agreed that it was still too early to scale back the current bond-buying levels of $85 billion each month. QE is a dollar-positive event, so traders should prepare for the US currency to post gains against the major currencies when the Fed decides to taper.
The annual Jackson Hole Summit concluded on the weekend, but anyone expecting some clarity on QE tapering was in for a disappointment. Federal Reserve head Bernard Bernanke was a no-show, and other policymakers didn’t hesitate to share their views. Dennis Lockhart, head of the Atlanta Fed, said that tapering could start in September, but only if US economic numbers justified such a move. There was a more hawkish statement from James Bullard, head of the St. Louis Fed. Bullard said that there was no need for the Fed to rush into QE tapering. The uncertainty over QE tapering has boosted the US dollar, raised the yields on US treasury bonds and had worldwide repercussions, such as causing jittery investors to pull billions of dollars out of emerging markets.
US New Home Sales had beaten the estimate for four consecutive releases, but that impressive streak came to a crashing end on Friday, as the key housing indicator slid to its lowest level since January. The indicator came in at 394 thousand, nowhere near the estimate of 487 thousand. Earlier last week, US Unemployment Claims also was well off market expectations. Despite these disappointing releases, the US dollar remains steady against the euro, as the markets seemed more focused on QE than the latest US economic release.
Australians head for the polls on September 7, and the head of the opposition Liberal Party, Tony Abbott, is favored to become the new prime minister. Abbott is pro-business and has hammered away at the Labor government for mismanaging Australia’s economy, which continues to struggle. Abbott has promised a stronger economy and a return to budget surpluses. Australia has been hard hit by the global economic crisis, and the Australian dollar has plunged in recent months, shedding 11% of its value since May.
AUD/USD for Monday, August 26, 2013
AUD/USD August 26 at 12:30 GMT
AUD/USD 0.9012 H: 0.9044 L: 0.9004
AUD/USD is trading just above the 0.90 level in Monday trading. The pair touched a high of 0.9042 in Asian trading, but was unable to hold onto these gains and has dropped close to the 0.90 line in European trading. AUD/USD is currently testing the 0.90 level on the downside. This is followed by stronger support at 0.8926.
On the upside, there is resistance at 0.9089. This is followed by a resistance line at 0.9135.
- Current range: 0.9000 to 0.9089
Further levels in both directions:
- Below: 0.9000, 0.8926, 0.8848, 0.8747 and 0.8578
- Above: 0.9089, 0.9135, 0.9221 and 0.9328
OANDA’s Open Positions Ratio
AUD/USD ratio is showing little change in Monday trading. This is reflected in the pair’s current lack of movement. The makeup of the ratio shows a solid majority of long positions, indicating that trader sentiment is strongly biased towards the Aussie making gains against the US dollar.
The Aussie remains under pressure as it tries to stay above the important 0.90 line. With the US releasing key manufacturing numbers later in the day, we could see some movement from AUD/USD.
- 12:30 US Core Durable Goods Orders. Exp. 0.6%.
- 12:30 US Durable Goods Orders. Exp. -3.0%.
*Key releases are highlighted in bold
*All release times are GMT
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