AUD/USD – Steady as Markets Eye US Consumer Confidence

The Australian dollar is showing little movement in Tuesday trading, as AUD/USD trades in the low-0.90 range. In economic news, today’s highlight is US Consumer Confidence, as the markets hope that the US can shake off a host of recent weak releases. There are no Australian releases on Tuesday.

Is the US housing sector experiencing a downturn? Recent US numbers have not looked sharp, and the weak numbers are being felt in the housing industry. Building Permits slid to a five-month low in January, dropping to 0.94 million. The estimate stood at 0.98 million. Existing Home Sales looked awful, dropping to 4.62 million in January, compared to 4.87 million a month earlier. This was well short of the estimate of 4.73 million, and the lowest reading from the key indicator since July 2012. The markets will be hoping for better news from New Home Sales, which will be released on Wednesday.

Last week’s Federal Reserve minutes indicated that interest rates are unlikely to rise, even if unemployment drops to 6.5%. Previously, the Fed had said it would consider raising rates at the 6.5% threshold, but with unemployment falling faster than expected, Fed policymakers agreed that it would “soon be appropriate” to revise the Fed’s forward guidance regarding interest rate levels. The minutes also indicated that the Fed will likely continue trimming QE, barring any downturns in the economy.

The wobbly Aussie is sensitive to key Chinese releases, as China is Australia’s number one trading partner. Last week, Chinese Flash Manufacturing PMI pointed to contraction in the manufacturing sector for a second straight month, coming in below the 50-point level. The index dropped to 48.3 points, its lowest level in eight months. A decrease in Chinese manufacturing could have serious consequences for the Australian economy and weigh on the shaky Australian dollar. We’ll get another look at manufacturing data out of China, with the release of Final Manufacturing PMI on Saturday.

AUD/USD for Tuesday, February 25, 2014

AUD/USD February 25 at 11:50 GMT

AUD/USD 0.9035 H: 0.9044 L: 0.9004

AUD/USD Technical

• AUD/USD is showing little activity in Tuesday trading.
• 0.9000 has switched to a support role. This is a weak line which could see pressure during the day. This is followed by stronger support at 0.8893.
• On the upside, there is resistance at 0.9119. There is followed by resistance at 0.9229.
• Current range: 0.9000 to 0.9119

Further levels in both directions:

• Below: 0.9000, 0.8893, 0.8735, 0.8658 and 0.8516
• Above: 0.9119, 0.9229, 0.9361 and 0.9466

OANDA’s Open Positions Ratio

AUD/USD ratio is almost unchanged in Tuesday trading. This is consistent with what we are seeing from the pair, which is showing little movement. AUD/USD ratio continues to have a majority of long positions, reflecting a trader bias towards the Aussie moving higher against the US currency.

The Australian dollar continues to trade above the 0.90 level. AUD/USD has edged higher in European trading.

AUD/USD Fundamentals

• 14:00 US S&P/CS Composite-20 HPI. Exp. 13.3%.
• 14:00 US HPI. Exp. 0.4%.
• 15:00 US CB Consumer Confidence. Exp. 80.2 points.
• 15:00 US Richmond Manufacturing Index. Exp. 13 points.
• 15:10 US FOMC Member Daniel Tarullo Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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