AUD/USD – Aussie Calm Ahead of RBA Minutes

AUD/USD is steady on Monday, as the pair trades in the low-0.93 range early in the North American session. On the release front, Australian New Motor Vehicles fell 1.3% in July, marking a six-month low. The markets are keeping a close eye on the RBA policy meeting minutes, which will be released early on Tuesday.

With the US continuing to suffer from low inflation levels, markets expectations have been low for key inflation indicators. On Friday, PPI, the primary gauge of inflation in the manufacturing sector, slipped to 0.1%, down from 0.4% a month earlier. This matched the estimate. Weak inflation is one reason why the Federal Reserve is in no rush to raise interest rates, as low inflation points to slack in the economy. Meanwhile, US Preliminary UoM Consumer Sentiment slipped to 79.2 points, its lowest level since October. This follows weak retail sales numbers earlier in the week. This means that an improvement in the US labor market has not translated into stronger consumer confidence and spending, which are critical for economic growth.

Elsewhere in the US, Unemployment Claims came in higher than expected. The indicator climbed to 311 thousand, marking a six-week high. The estimate stood at 307 thousand. Employment indicators are being closely scrutinized by analysts, as the strength of the labor market is one of the most important factors influencing the Federal Reserve regarding the timing of an interest rate hike. A rate increase is expected by mid-2015, but stronger economic data, especially on the employment front, could hasten a move by the Fed. Earlier in the week, JOLTS Job Openings hit its highest level in 13 years, although it too missed expectations.

Australian confidence indicators looked solid last week, helping the Aussie hold its own against the US dollar. Westpac Consumer Sentiment climbed 0.8%, its strongest gain since October 2012. Earlier in the week, NAB Business Confidence reached 11 points, its fourth straight increase. Stronger confidence levels should translate into increased economic growth, which would be positive news for the Australian dollar.

 

AUD/USD for Monday, August 18, 2014

AUD/USD August 18 at 13:55 GMT

AUD/USD 0.9318 H: 0.9328 L: 0.9309

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.9020 0.9119 0.9229 0.9361 0.9446 0.9617

 

  • AUD/USD has been almost unchanged in the Asian and European sessions.
  • 0.9229 continues to provide strong support.
  • 0.9361 is an immediate resistance line. 0.9446 is next.
  • Current range: 0.9229 to 0.9361

Further levels in both directions:

  • Below: 0.9229, 0.9119, 0.9020 and 0.8916
  • Above: 0.9361, 0.9446, 0.9617 and 0.9757

 

OANDA’s Open Positions Ratio

AUD/USD ratio is almost unchanged on Monday. This is consistent with the lack of movement being displayed by the pair. The ratio has a small majority of long positions, indicative of slight trader bias towards the Australian dollar continuing to move to higher ground.

 

AUD/USD Fundamentals

  • 1:30 Australian New Motor Vehicle Sales. Actual -1.3%.
  • 14:00 US NAHB Housing Market Index. Estimate 53 points. Actual 55 points.

* 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.