AUD/USD – Dovish RBA Minutes Continues to Spook Aussie

AUD/USD has slipped about 100 points on Wednesday, as the pair trades in the low-0.86 range. Taking a look at today’s releases, US housing data was a mix. Building Permits was unexpectedly strong, climbing to 1.08M. This beat the estimate of 1.04M and marked a six-month high. Housing Starts could not keep pace, edging lower to 1.01M. The estimate stood at 1.03M. We’ll get a look at consumer inflation numbers on Thursday, with the release of CPI and Core CPI.  There are no Australian releases on Wednesday.

The Australian dollar continues to lose ground in reaction to the dovish RBA minutes, in which the central bank reiterated that interest rates would remain at record low levels. The RBA has maintained rates at 2.50% since July 2013 and has been reluctant to tinker with this level. The RBA took another swipe at the Aussie, saying the currency remains overvalued. Although the Australian dollar is trading well below the 0.90 level, the RBA would like to see the currency at lower levels in order to facilitate economic growth and boost the ailing export sector.

Australian data started the week off on a disappointing note, as New Motor Vehicle Sales, an important consumer indicator, declined by 1.6%. Last week, Inflation Expectations gained 4.1%. This was the indicator’s best showing since April. Confidence indicators were a mix. Westpac Consumer Sentiment gained 1.9% last month, a second straight gain. This was the indicator’s highest gain since July. NAB Business Confidence dropped to 4 points, as the key indicator has softened for a third straight month.

AUD/USD for Wednesday, November 19, 2014

AUD/USD November 19 at 15:45 GMT

AUD/USD 0.8620 H: 0.8711 L: 0.8614

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.8315 0.8456 0.8550 0.8668 0.8763 0.8820

 

  • AUD/USD posted sharp gains during the Asian session. The pair steadied during the European session but has resumed a downward move in North American trade.
  • 0.8550 is the next support level.
  • 0.8668 has reverted to a resistance role as the pair trades at lower levels. 0.8763 is stronger.
  • Current range: 0.8550 to 0.8668.

Further levels in both directions:

  • Below: 0.8550, 0.8456, 0.8315 and 0.8240
  • Above: 0.8668, 0.8763, 0.8820, 0.8953 and 0.9020

 

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in long positions on Wednesday, continuing the trend we saw a day earlier. This is not consistent with what we’re seeing from the pair, as the Australian dollar has sustained sharp losses. The ratio has a majority of long positions, indicative of trader bias towards AUD/USD reversing directions and gaining ground.

 

AUD/USD Fundamentals

  • 13:30 US Building Permits. Estimate 1.04M. Actual 1.08M.
  • 13:30 US Housing Starts. Estimate 1.03M. Actual 1.01M.
  • 15:30 US Crude Oil Inventories. Estimate -0.7M.
  • 19:00 US FOMC Meeting Minutes.

* 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.