AUD/USD – Stable as RBA Says Rates to Remain Unchanged

AUD/USD is stable on Tuesday, as the pair trades in the low-0.93 range early in the North American session. On the release front, the RBA minutes stated that a rate hike is unlikely. Later on, RBA Governor Glenn Stevens will testify before a parliamentary committee in Brisbane. In the US, Tuesday’s numbers were mixed. CPI and Core CPI posted weak gains of 0.1%, while Building Permits and Housing Starts improved in July and beat their estimates.

The RBA released the minutes from its recent policy meeting, and the tone was somewhat pessimistic. Policymakers stated there was a “significant degree of uncertainty” in the economic outlook, and therefore a rate increase is unlikely. The RBA cut its growth and inflation forecasts in July, wage growth has slowed and unemployment has climbed, so clearly the current economic environment doesn’t favor a rate hike.

US housing numbers were sharp on Tuesday. Building Permits improved to 1.05 million, beating the estimate of 1.00 million. Housing Starts jumped to 1.09 million, easily beating the estimate of 0.97 million. Meanwhile, inflation numbers in the US remain at very low levels. On Tuesday, CPI and Core CPI, the primary gauges of consumer inflation, both posted paltry gains of 0.1%.  These weak readings come on the heels of PPI, a manufacturing inflation index, which also came in at 0.1% last month. 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.

Financial leaders and central bankers from around the world will gather in Jackson Hole, Wyoming for a conference which starts on Friday. This will be Janet Yellen’s first appearance as Fed chair at the conference, and will undoubtedly be the star of the show. Yellen is expected to discuss the employment market rather than monetary policy, but the markets will be listening closely for any hints as to an interest rate hike.

 

AUD/USD for Tuesday, August 19, 2014

AUD/USD August 19 at 14:40 GMT

AUD/USD 0.9323 H: 0.9344 L: 0.9317

 

AUD/USD Technical

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

 

  • AUD/USD has shown a reverse head-and-shoulders pattern on Tuesday, leading to little net movement of the pair.
  • 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 pointing to gains in long positions on Tuesday. This is not 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 breaking out and moving to higher ground.

 

AUD/USD Fundamentals

  • 1:30 RBA Monetary Policy Meeting Minutes.
  • 12:30 US Building Permits. Estimate 1.00M. Actual 1.05M.
  • 12:30 US CPI. Estimate 0.1%. Actual 0.1%.
  • 12:30 US Core CPI. Estimate 0.2%. Actual 0.1%.
  • 12:30 US Housing Starts. Estimate 0.97M. Actual 1.09M.
  • 23:30 RBA Governor Glenn Stevens Speaks. Stevens will testify before the House of Representatives Standing Committee on Economics in Brisbane.

* 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.