AUD/USD: Steady as Markets Eye Unrest in Ukraine and Mid-East

AUD/USD has edged lower on Monday, as the pair trades in the high-0.93 range early in the North American session.  Investors are in a cautious mood to start off the week, as tensions rise in the Ukraine and the fighting in Gaza shows no signs of letting up. On the release front, it’s a very quiet day, with no US releases on the schedule. In Australia, today’s sole event is a speech in Sydney from RBA Assistant Governor Guy Debelle.

On Friday, US Consumer Sentiment remained steady at 81.3 points, but this was well below the estimate of 83.5 points. A day earlier, Unemployment Claims dropped slightly to 302 thousand, beating the estimate of 310 thousand. This figure marks a seven-week low, as the economy continues to churn out impressive employment data. With Janet Yellen telling Congress that a rate hike could be pushed forward if inflation and employment data exceeds expectations, improving employment data will put more pressure on the Fed to raise rates.

Federal Reserve Chair Janet Yellen concluded two days of testimony on Capitol Hill last week. Yellen declined to answer questions about when the Fed would begin to raise rates, but she did acknowledge that most economists expect the Fed to make a move in the third quarter of 2015. On Tuesday, the dollar moved higher when Yellen said that the economy still required monetary stimulus, but rates could increase sooner than expected if inflation and job numbers improved more quickly than anticipated. The Federal Reserve’s asset purchase program (QE) has flooded the economy with over $2 trillion, keeping interest rates at ultra-low levels, but the Fed has been trimming the program since last December, when it stood at $85 billion/month. Currently, the Fed is pumping $45 billion/month into the economy, and the next taper is expected in August, with plans to terminate QE in October.

The Australian dollar continues to hold its own against its US counterpart, despite some unimpressive Australian data last week. The important CB Leading Index continues to struggle, as the indicator posted a weak gain of 0.2% last month. This was the first reading above the zero level since March. NAB Quarterly Business Confidence came in at 6 points in the second quarter. This was down from the previous reading of 7 points, which was upwardly revised from a previously estimated reading of 6 points.

AUD/USD for Monday, July 21, 2014

AUD/USD July 21 at 14:10 GMT

AUD/USD 0.9380 H: 0.9398 L: 0.9372

AUD/USD Technical

• AUD/USD was almost unchanged in the Asian session, and edged lower in European trading. The pair is unchanged early in the North American session.
• On the downside, 0.9361 is under pressure. There is stronger support at 0.9229.
• 0.9446 is the next resistance line. This is followed by resistance at 0.9617.

Further levels in both directions:

• Below: 0.9361, 0.9229, 0.9119 and 0.9000
• Above: 0.9446, 0.9617, 0.9757 and 0.9842

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in short positions in Monday trade. This is consistent with the movement of the pair, as the Australian dollar has made posted small losses. The ratio has a majority of short positions, indicative of trader bias towards the USD gaining ground.

AUD/USD Fundamentals

• 23:25 RBA Assistant Governor Guy Debelle Speaks.

* Key releases are highlighted in bold

*All release times are GMT

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