AUD/USD – Aussie Rally Continues as Oil Rebounds

AUD/USD has posted gains on Tuesday, continuing the trend we saw in the Monday session. AUD/USD is trading at the 0.78 line early in the North American session. In economic news, the RBA minutes reiterated that it was in no rush to lower interest rates. RBA Governor Glenn Stevens spoke at a banking conference in New York. In the US, Building Permits and Housing Starts both posted sharp drops and missed expectations. On Wednesday, the US releases Existing Home Sales and Australia will publish NAB Quarterly Business Confidence.

The Australian dollar continues to move higher, and has gained 150 points so far this week. The Aussie lost ground after oil producers failed to reach agreement at a weekend meeting in Qatar, raising fears that oil prices would collapse. However, this dire prediction failed to materialize as oil prices have stabilized this week. With investors less averse to risk, commodity currencies like the Australian dollar have moved higher. Meanwhile, the RBA released the minutes of its April policy meeting. The central bank said that it would cut rates if warranted by economic conditions. Policymakers also expressed concern about the appreciation of the Australian dollar, which has climbed 2 percent since March 1. However, when the RBA has felt that the Aussie is overvalued, it has historically tried to “talk down” the currency rather than lower interest rates.

The US economy continues to perform well despite some weak sectors, such as the manufacturing industry. US manufacturers continue to face stiff competition with countries that pay much lower wages, such as China, India, and other Asian countries. With turbulent global economic conditions leading to weaker demand, the manufacturing sector is facing additional challenges. There was some positive news on Friday, as the Empire State Manufacturing Index climbed 9.6 points in April, crushing the estimate of 2.1 points. It was the indicator’s highest level since January 2015. We’ll get a look at the Philly Fed Manufacturing Index, a key manufacturing report, on Thursday. Meanwhile, the UoM Consumer Sentiment dropped to 89.7 points in April, short of the estimate of 91.9 points. Although consumer sentiment remains high, this marked the first time since September that the indicator fell below the symbolic 90 level.

AUD/USD Fundamentals

Monday (April 18)

  • 21:30 RBA Monetary Policy Meeting Minutes

Tuesday (April 19)

  • 8:30 US Building Permits. Estimate 1.20M. Actual 1.09M
  • 8:30 US Housing Starts. Estimate 1.17M. Actual 1.09M
  • 9:30 RBA Governor Glenn Stevens Speaks
  • 20:30 Australian MI Leading Index

Upcoming Key Events

Wednesday (April 20)

  • 14:00 US Existing Home Sales. Estimate 5.29M
  • 21:30 Australian NAB Quarterly Business Confidence

*All release times are EDT

AUD/USD for Tuesday, April 19, 2016

AUD/USD April 19 at 8:45 EDT

Open: 0.7768 Low: 0.7759 High: 0.7806 Close: 0.7802

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.7560 0.7678 0.7796 0.7913 0.8054 0.8163
  • AUD/USD has shown small gains over the Asian and European sessions
  • There is resistance at 0.7913
  • 0.7796 remains fluid and has switched to a support role. It is under strong pressure
  • Current range: 0.7796 to 0.7913

Further levels in both directions:

  • Below: 0.7796, 0.7678, 0.7560 and 0.7472
  • Above: 0.7913, 0.8054 and 0.8163

OANDA’s Open Positions Ratio

The AUD/USD ratio has shown movement towards short positions on Tuesday. Short positions have a majority of positions (44%), indicative of trader bias towards the pair reversing directions and losing ground.

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.