AUD/USD – Aussie Gains After RBA Minutes

AUD/USD has posted gains in Tuesday trading. Early in the North American session, the pair is trading in the low-0.94 range. The Australian dollar got a boost after the release of the RBA minutes, in which the Bank said that recent rate cuts were working. Later on Tuesday, Australian MI Leading Index will be released. Over in the US, it’s another quiet day, with just one data release. Today’s highlights include speeches by US Treasury Jack Lew and two FOMC members.

The Australian dollar is showing some strength on Tuesday, courtesy of upbeat minutes from the RBA’s most recent policy meeting. The Bank noted that there was “mounting evidence” that interest rate cuts have been effective. The RBA trotted out its customary line that it was holding rates but reserves the right to reduce rates if needed. The Bank again railed against the high value of the Australian dollar, noting that “a lower level of the exchange rate would likely be needed to achieve balanced growth in the economy”. Ironically, despite this blunt assessment about the overvalued currency, the Aussie posted respectable gains following the release of the minutes. Analysts have noted that the RBA is maintaining a mild easing bias so as to snuff out any rally by the Australian dollar.

On Wednesday, the Federal Reserve will release the minutes of its most recent policy meeting. This event is a market-mover and analysts will be paying close attention to the minutes, especially regarding QE. The markets are expecting the Fed to hold off from tapering in December, as US numbers are still not as strong as the Fed would like. Market sentiment is leaning towards the Fed sticking to its present monetary policy, and any surprises in the minutes would likely shake up the currency markets.

Federal Reserve chair-elect Janet Yellen testified last week before the powerful Senate Banking Committee. Yellen has been an ardent supporter of QE, and told the committee that the present level of asset purchases should continue until growth improves and unemployment falls. She said that the labor market and economy are performing “far short of their potential”, but added that she expects inflation to remain below the Fed’s target of 2%. Yellen, who is slated to become the first woman to head the Federal Reserve, will take over from Bernard Bernanke in January.

 

AUD/USD for Tuesday, November 19, 2013

Forex Rate Graph 21/1/13

AUD/USD November 19 at 14:20 GMT

AUD/USD 0.9414 H: 0.9447 L: 0.9354

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.9229 0.9305 0.9400 0.9508 0.9613 0.9700

 

  • AUD/USD has posted gains on Tuesday. The pair touched a high of 0.9447 early in the European session, but was unable to hold onto these gains.
  • 0.9400 has reverted to support, with the Australian dollar moving higher. This is a weak line which could be tested during the day. This is followed by stronger support at 0.9305.
  • AUD/USD pair is facing resistance at 0.9508. This is followed by resistance at 0.9613, which has remained intact since late October.
  • Current range: 0.9400 to 0.9508

 

Further levels in both directions:

  • Below: 0.9400, 0.9305, 0.9229, 0.9119 and 0.9000
  • Above: 0.9508, 0.9613, 0.9700 and 0.9823

 

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in long positions in Tuesday trading. This is not reflected in the current movement of the pair, as the Australian dollar continues to push higher. The ratio is made up of a substantial majority of long positions, reflecting a trader bias towards the Australian dollar continuing to move to higher ground.

The Aussie has started the week well and has pushed above the 0.94 line. Will the upward trend continue? With no major releases out of the US on Monday, we could see the pair settle down during the North American session.

 

AUD/USD Fundamentals

  • 23:00 Australian MI Leading Index.
  • 13:30 US Employment Cost. Estimate 0.5%. Actual 0.4%.
  • 13:45 US Treasury Secretary Jack Lew Speaks.
  • 15:00 FOMC Member William Dudley Speaks.
  • 19:15 FOMC Member Charles Evans Speaks.
  • 20:00 President Barack Obama Speaks.

 

*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.