AUD/USD – Aussie on the Move Despite Flak From RBA

The Australian dollar continues to post gains on Tuesday, as AUD/USD is trading above the 0.88 line. On the release front, the RBA minutes said that the Australian dollar was overvalued. Later in the day, we’ll get a look at two minor events, MI Leading Index and CB Leading Index. As well, RBA Deputy Governor Philip Lowe will address a financial conference in Sydney. The Aussie got a boost from strong Chinese data, as Industrial Production posted a sharp gain in September. In the US, the sole release on the calendar is Existing Homes Sales. The markets are expecting the indicator to improve in the September release.

Predictably, the RBA minutes took a shot at the high value of the Australian dollar, with the central bank saying that the currency was still weighing on the economy. However, the minutes noted that Australian growth continued to be “moderate”. Meanwhile, the currency got a helping hand from Chinese Industrial Production, which shot up to 8.0%, up from 6.9% a month earlier. The excellent reading easily beat the forecast of 7.5%. Chinese GDP slipped to 7.3% in Q3, down from 7.5% in the previous quarter, but above the estimate of 7.2%. The Aussie is sensitive to key Chinese numbers, as China is Australia’s number one export destination.

US releases wrapped up the week on a high note, as UoM Consumer Sentiment climbed to 86.4 points, its highest reading since July 2007. The markets had expected a reading of 84.3 points. This indicates that the US consumer remains optimistic about the economy and is not overly concerned about warnings of a global slowdown. On the housing front, Building Permits and Housing Starts met expectations. Strong US employment numbers continue to drive the US recovery, as US job claims dropped to 264 thousand, marking a 14-year low. The estimate stood at 286 thousand.

AUD/USD for Tuesday, October 21, 2014

AUD/USD October 21 at 13:45 GMT

AUD/USD 0.8829 H: 0.8833 L: 0.8760

AUD/USD Technical

• AUD/USD edged higher in the Asian session. The pair has broken through resistance at 0.8820 in European trade.
• 0.8820 has reverted to a support role as the Aussie trades at higher level. 0.8763 is stronger.
• 0.8953 is a strong resistance line.
• Current range: 0.8820 to 0.8953

Further levels in both directions:

• Below: 0.8820, 0.8763, 0.8668, 0.8550 and 0.8456
• Above: 0.8953, 0.9020, 0.9119 and 0.9217

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in short positions on Tuesday. This is not consistent with the pair’s movement, as the Aussie continues to post gains. The ratio has a majority of long positions, indicative of trader bias towards AUD/USD continuing to move to higher ground.

AUD/USD Fundamentals

• 12:30 RBA Monetary Policy Meeting Minutes.
• 8:55 RBA Deputy Governor Kevin Lowes Speaks.
• 23:00 Australian CB Leading Index.
• 23:00 Australian MI Leading Index.
• 14:00 US Existing Home Sales. Estimate 5.11M.

* Key releases are highlighted in bold

*All release times are GMT

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