The Australian dollar is stable on Wednesday, as AUD/USD trades in the mid-0.90 range in the North American session. On the release front, US inflation numbers remain weak, as Core CPI slipped to -0.2% last month. The Federal Reserve will release a statement following its policy meeting. The sole Australian release today, MI Leading Index, posted a decline of -0.1% for a second straight month.
US inflation data was worse than expected on Wednesday. CPI, the primary gauge of consumer inflation, came in at -0.2%, its first drop since October. The estimate stood at +0.1%. Core CPI followed suit with a flat reading of 0.0%. This was the first time the index failed to post a gain since October 2010. The weak numbers follow disappointing manufacturing inflation data. PPI, a key event, dipped to just 0.0%, a 3-month low. The estimate stood at 0.1%. Core PPI slipped to 0.1%, down from 0.2% a month earlier. This matched the forecast. Low inflation continues to be a concern and could delay an interest rate hike in 2015.
The Federal Reserve will be in the spotlight on Wednesday, with the Fed expected to trim its QE scheme by another $10 billion at its policy meeting. At one time, the Fed was pumping up to $85 billion/month, but a strong recovery has allowed the Fed to steadily taper its asset purchases, and the QE program is expected to wind up in October. There is speculation that the Fed could use hawkish language in its statement, which would be bullish for the US dollar.
The RBA minutes contained no surprises, as the minutes focused on interest rate levels and the value of the Australian dollar. The RBA said that rate levels would remain unchanged and took a swipe at the Aussie, noting that the exchange rate remains “above most estimates of its fundamental value.” There was further pressure on the currency as RBA Assistant Governor Christopher Kent said on Tuesday that a decline in the Australian dollar would increase demand for local producers. Perhaps the RBA policymakers are in a better mood this week, following the Aussie’s losses of over 300 points against the US dollar last week.
Scottish voters will cast their ballots in a referendum on independence on Thursday. The most recent polls are pointing to a close vote, with many voters still undecided. If voters do choose to secede from the UK, this would create plenty of questions and uncertainty, including what currency an independent Scotland would use and how the national debt would be divided. A vote to split up the UK could lead to turmoil in the markets and weigh heavily on the markets. Traders should treat the referendum as a market-mover, as a close vote could have negative repercussions for the struggling pound.
AUD/USD for Wednesday, September 17, 2014
AUD/USD September 17 at 14:05 GMT
AUD/USD 0.9059 H: 0.9084 L: 0.9053
- AUD/USD remains rangebound on Wednesday.
- 0.9020 remains an immediate support level. Will the pair break below this line? 0.8953 is stronger.
- On the upside, 0.9119 is a strong resistance line.
- Current range: 0.9020 to 0.9119
Further levels in both directions:
- Below: 0.9020, 0.8953, 0.8820, 0.8860 and 0.8763
- Above: 0.9119, 0.9229, 0.9361, 0.9446 and 0.9617
OANDA’s Open Positions Ratio
AUD/USD ratio is almost unchanged on Wednesday, continuing the trend which has marked the ratio throughout the week. This is consistent with the pair’s limited movement. The ratio has a majority of long positions, indicative of trader bias towards the Aussie breaking out and moving higher.
- 00:30 Australian MI Leading Index. Actual -0.1%.
- 12:30 US CPI. Estimate +0.1%. Actual -0.2%.
- 12:30 US Core CPI. Estimate 0.2%. Actual 0.0%.
- 12:30 US Current Account. Estimate -114B. Actual -99B.
- 14:00 US NAHB Housing Market Index. Estimate 56 points. Actual 59 points.
- 14:30 US Crude Oil Inventories. Estimate -0.9M.
- 18:00 US FOMC Economic Projections.
- 18:00 US FOMC Statement.
- 18:00 US Federal Funds Rate. Estimate <0.25%.
- 18:30 US FOMC Press Conference.
* Key releases are highlighted in bold
*All release times are GMT