AUD/USD – Aussie Flat Ahead of Business Confidence

AUD/USD has posted small gains on Wednesday, continuing the upward trend we’ve seen this week. AUD/USD is trading slightly above the 0.78 line in the European session. In economic news, the Australian MI Leading Index posted a small decline of 0.1%. Later in the day, Australia releases NAB Quarterly Business Confidence. In the US, we’ll get a look at Existing Home Sales and the Crude Oil Inventories. On Thursday, the US releases two key events – the Philly Fed Manufacturing Index and Unemployment Claims.

The Australian dollar continues to move higher, and has gained closed to 200 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 and the Aussie has rebounded sharply this week. 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 surged 9.5 percent since February 1. Historically however, when the RBA has felt that the Aussie is overvalued, it has tried to “talk down” the currency rather than lower interest rates, so the RBA is unlikely to cut rates simply to curb the hot Australian dollar.

Oil prices have shown strong volatility since the weekend, when oil producers attended a meeting in Qatar on Sunday. The gathering, which included OPEC and non-OPEC nations, ended in disarray, without any agreement being reached by the participants. There was optimism that the parties might agree to maintain current production levels, but hopes for even this limited move were dashed when Saudi Arabia insisted that any agreement had to cover Iran. When this didn’t materialize, the participants closed up shop and returned home. The failure of the talks could severely undermine the credibility of oil producers, and the huge oversupply of crude could worsen if Saudi Arabia and other suppliers decide to increase output.

AUD/USD Fundamentals

Tuesday (April 19)

• 20:30 Australian MI Leading Index. Actual -0.1%

Wednesday (April 20)

• 14:00 US Existing Home Sales. Estimate 5.29M
• 10:30 US Crude Oil Inventories. Estimate 2.2M
• 21:30 Australian NAB Quarterly Business Confidence

Upcoming Key Events

Thursday (April 21)

• 8:30 US Philly Fed Manufacturing Index. Estimate 8.1 points
• 8:30 US Unemployment Claims. Estimate 265K

*All release times are EDT

AUD/USD for Wednesday, April 20, 2016

AUD/USD April 20 at 7:45 EDT

Open: 0.7796 Low: 0.7767 High: 0.7824 Close: 0.7819

AUD/USD Technical

• AUD/USD showed small losses in the Asian session but has rebounded and posted gains in European trade
• There is resistance at 0.7913
• 0.7796 remains fluid and is a weak support line. It could see further action during the day
• 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 is unchanged on Wednesday. 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.