The Australian dollar continues to head south on Monday, as AUD/USD trades in the mid-0.88 range early in the North American session. The Aussie has been in free fall in September, giving up about 450 points. Taking a look at Monday’s events, the US will release Existing Home Sales later in the day. There are no Australian releases on Monday.
US Unemployment Claims has looked sluggish over the past two readings, but that changed on Thursday, as the key indicator sparkled, dropping to 280 thousand, down sharply from 315 thousand in the previous reading. The estimate stood at 312 thousand. Building Permits was not as strong, dipping to 1.00M. This was shy of the estimate of 1.04M. There was disappointing news from the manufacturing front, as the Philly Fed Manufacturing Index slipped to 22.5 points, down from 28.0 a month earlier. The estimate stood at 22.8 points.
On Wednesday, AUD/USD dropped over 100 points last week following the Federal Reserve statement. The Fed statement reaffirmed that interest rates would remain ultra-low for a “considerable time” after the asset purchase scheme (QE) ends next month, but surprised the markets in hinting that once a rate hike was introduced, rate levels could move up more quickly than expected. As expected, the Fed trimmed QE by $10 billion/month, and the remaining $15 billion/month is scheduled to be phased out in October.
US inflation data was worse than expected in August. 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.
AUD/USD for Monday, September 22, 2014
AUD/USD September 22 at 13:45 GMT
AUD/USD 0.8866 H: 0.8950 L: 0.8864
- AUD/USD moved lower late in the Asian session and has continued to lose ground in European trade. The pair is unchanged in North American trade.
- 0.8820 is providing support. This line has weakened as the Australian dollar continues to lose ground.
- 0.8953 is the next resistance line.
- Current range: 0.8953 to 0.9020
Further levels in both directions:
- Below: 0.8820, 0.8763, 0.8668 and 0.8550
- Above: 0.8953, 0.9020, 0.9119, 0.9229 and 0.9361
OANDA’s Open Positions Ratio
AUD/USD ratio is pointing to gains in short positions on Monday. This is consistent with the pair’s movement, as the Aussie has posted strong losses. The ratio has a majority of long positions, indicative of trader bias towards the Aussie reversing directions and moving to higher ground.
- 14:00 US Existing Home Sales. Estimate 5.21M.
- 14:05 US FOMC Member William Dudley Speaks.
- 23:30 US FOMC Member Narayana Kocherlakota Speaks.
* Key releases are highlighted in bold
*All release times are GMT