AUD/USD – Aussie Rally Pauses, Markets Eye US Housing, Consumer Confidence Reports

The Australian dollar is steady on Tuesday, following sharp gains a day earlier. AUD/USD is trading at 0.7240 early in the North American session. In economic news, it’s a busy day. The US will release two key events – Existing Home Sales and CB Consumer Confidence. Later in the day, Australia releases Construction Work Done and Wage Price Index.

The RBA continues to maintain an easing bias, primarily as a result of weak inflation levels, and has repeatedly said that it is prepared to cut  interest rates from the current level of 2.00% if necessary. The RBA released the minutes of its previous monetary policy meeting last week, and the minutes reiterated the central bank’s view that the Australian economy has shown modest improvement, but concerns remain over the softer Chinese economy, which is Australia’s largest trading partner. Inflation numbers will be closely watched ahead of next week’s RBA rate statement, so the Wage Price Index release could shake up the pair in Tuesday’s North American session.

The Federal Reserve continues to be scrutinized by the markets, as the timing of another rate hike remains up in the air. The Fed sent out a cautious message in last week’s policy minutes, which reiterated the central bank’s concern that turmoil in global markets could have negative repercussions for the US economy. Policymakers sent out a broad hint that a rate hike is unlikely in March, as they discussed “altering their earlier views of the appropriate path for the target range for the federal funds rate”. This could have a negative impact on the US dollar, as investors will be looking at other options if US rates do not move higher. Fed policymakers appear divided on the Fed’s upcoming strategy. Janet Yellen said last week that the Fed still planned to raise rates later in 2016, but FOMC member James Bullard argued that there was room to delay any rate moves, given global financial turmoil and weak US inflation. Many market players are skeptical that the Fed will make any moves before next year. In December, the Fed hinted at a series of rate hikes during 2016, but the turmoil in the financial markets and the downturn in the US economy in early 2016 have left the timing of another hike in doubt.

AUD/USD Fundamentals

Tuesday (Feb. 23)

  • 9:00 US S&P/CS Composite-20 HPI. Estimate 5.8%. Actual 5.7%
  • 10:00 US CB Consumer Confidence. Estimate 97.4 points
  • 10:00 US Existing Home Sales. Estimate 5.37M
  • 10:00 US Richmond Manufacturing Index. Estimate 2 points
  • 20:30 US FOMC Stanley Fischer Speaks

Wednesday (Feb. 24)

  • 10:00 US Existing Home Sales. Estimate 522K
  • 19:30 Australian Construction Work Done. Estimate -2.1%
  • 19:30 Australian Wage Price Index. Estimate 0.6%

*Key releases are highlighted in bold

*All release times are EST

AUD/USD for Tuesday, February 23, 2016

AUD/USD February 23 at 8:50 EST

AUD/USD  Open: 0.7231 Low: 0.7211  High: 0.7259 Close: 0.7243

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.7012 0.7100 0.7213 0.7385 0.7440 0.7533
  • AUD/USD has showed limited movement over the course of the day
  • 0.7213 has switched to support following sharp gains on Monday. It remains a weak line
  • There is resistance at 0.7385
  • Current range: 0.7213 to 0.7385

Further levels in both directions:

  • Below: 0.7213, 0.7100, 0.7012 and 0.6931
  • Above: 0.7385, 7440 and 0.7533

OANDA’s Open Positions Ratio

AUD/USD ratio is showing little movement, consistent with the lack of movement from the pair. The ratio remains close to an even split between long and short positions, which is indicative of a lack of trader bias as to which direction the pair will take next.

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.