AUD/USD – Steady as Markets Eye RBA Minutes

Australian dollar is unchanged on Monday, as the pair trades at 0.7254 in the North American session. Taking a look at economic releases, there are no Australian releases on Monday. In the US, today’s sole economic event was NAHB Housing Market Index. The indicator, which measures sentiment amongst US homebuilders rose to 64 points in October, its highest level in 10 years. There are two events on Tuesday that should be treated as market-movers. In Australia, the RBA will release the minutes of its policy meeting earlier in October. Also, the US will release Building Permits, with little change expected in the September report.

Australian job numbers were dismal last week, as Employment Change posted its first decline in five months. The reading of -5.1 thousand surprised the markets, which had expected a gain of 7.2 thousand. The unemployment rate remained unchanged at 6.2%, matching the forecast. There is a reasonable likelihood that the RBA could cut rates within the next 6 months, and these kind of weak readings are not good news for the Australian currency, as they lead to increased speculation that a rate cut is in the cards.

US key releases on Friday were a mixed bag. UoM Consumer Sentiment, the primary gauge of consumer confidence, jumped to 92.1 points in October, up from 85.7 points. This easily beat the estimate of 88.8 points. At the same time, JOLTS Job Openings slipped to 5.37 million, way off the estimate of 5.77 million. The JOLTS release is especially important as it is watched closely by the Fed and is a factor in its decision-making process regarding monetary policy.

Meanwhile, US manufacturing numbers in October were dismal. The Empire State Manufacturing Index posted its third straight decline, coming in at -11.4 points, missing the forecast of -7.3 points. The Philly Fed Manufacturing Index, a key release, came in at -4.5 points, shy of the estimate of -1.8 points. These figures point to contraction in the US manufacturing sector, which continues to suffer from weak global demand.

US Federal Reserve policymakers continue to be divided on the question of a rate hike in 2015. This was underscored last week by FOMC member Lael Brainard, who stated that the Fed should not raise rates before global economic conditions improve. Brainard noted that the Chinese slowdown has caused economic turmoil worldwide, and the US economy could lose steam due to weaker exports and weak global economic conditions. On the other end of the spectrum, another member of the FOMC, Dennis Lockhart, sounded more optimistic about a rate hike before the end of 2015. Lockhart did not rule out a rate hike in October, and added that the Fed would have more data to evaluate before its December policy meeting. With FOMC members sending out such conflicting messages, exasperated markets have been unable to get a handle on the timing of a rate hike, and this failure of the Fed to communicate a clear message continues to lead to uncertainty in the markets.

AUD/USD Fundamentals

Monday (Oct. 19)

• 14:00 Fed FOMC Member Lael Brainard Speaks.
• 14:00 US NAHB Housing Market Index. Estimate 62 points. Actual 64 points.
• 16:00 Fed FOMC Member Jeffrey Lacker Speaks.

Upcoming Key Events

Tuesday (Oct. 20)

• 00:30 RBA Monetary Policy Meeting Minutes
• 12:30 US Building Permits. Estimate 1.16M

*Key releases are highlighted in bold

*All release times are GMT

AUD/USD for Monday, October 19, 2015

USD/JPY October 19 at 15:45 GMT

USD/JPY 0.7254 H: 0.7307 L: 0.7236

AUD/USD Technical

• 0.7213 is a weak support level. The round number of 0.71 is stronger.
• 0.7440 is a strong resistance line.
• Current range: 0.7213 to 0.7440

Further levels in both directions:

• Below: 0.7213, 0.7100, 0.7060 and 0.70
• Above: 0.7440, 0.7664, 0.7770 and 0.7849

OANDA’s Open Positions Ratio

AUD/USD ratio retains a solid majority of long positions (54%), indicative of trader bias towards the Australian dollar moving to higher levels.

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.