AUD/USD – Aussie Dips on Currency Comments From RBA

AUD/USD has posted slight losses on Tuesday, erasing the gains seen on Monday. Early in the North American session, the pair is trading just above the 0.75 level. On the release front, Australian NAB Business Confidence impressed with a reading of plus -6. We’ll get a look at Westpac Consumer Sentiment later in the day. In the US, there are no major events on the schedule. NFIB Small Business Index came in at 94.4 points, short of the forecast of 94.9 points. On Wednesday, Australia releases key employment data. Employment Change is expected to post a solid gain of 15.2 thousand, while the unemployment rate is predicted to remain pegged at 5.7%.

The Australian dollar has lost ground on Tuesday following remarks from RBA assistant governor Christopher Kent. At an event in Sydney, Kent was unusually blunt in his remarks about the Australian dollar, saying that the exchange rate had not dropped as much as expected following recent rate cuts. The bank lowered rates by a quarter-point in May and August to a record low 1.50%. The Aussie is currently trading at the 0.75 level, unchanged since the rate cut back in May. The RBA has often fretted about the high value of the exchange rate, but any declines by the Aussie after such comments have usually been short-lived. There was positive news from the business sector, as NAB Business Confidence improved to plus -6 in August, up from plus-4 in the previous release.

With the Federal Reserve holding a crucial policy meeting on September 21, the markets have been paying even closer attention to recent comments from Fed policymakers. On Monday, FOMC member Lael Brainard sounded cautious, saying it would be prudent to maintain a loose monetary policy. Brainard noted global uncertainties and weak inflation as reasons for the Fed not to rush into raising rates. This dovish message was in marked contrast to remarks from FOMC member Eric Rosengren on Friday, who came out in support of a rate hike, without providing a timeline. Rosengren said that “tightening is likely to be appropriate”, and went as far as to say that the US economy could overheat if the Fed didn’t act soon. These mixed messages certainly haven’t clarified matters, leaving markets players in the dark as to the Fed’s monetary plans. However, they have led to plenty of movement in the odds of a rate hike, which moved higher after Rosengren’s speech, only to drop following Brainard’s comments. The likelihood of a September hike has dipped to 15%, while the odds of a December rate hike are down to 45%. The markets will have few fundamental cues to work with until Thursday and Friday, when the US will release retail sales, CPI and consumer confidence numbers. If these numbers are stronger than expected, the odds of a rate hike next week will move higher, and the dollar could make headway against its rivals.

AUD/USD Fundamentals

Monday (September 12)

  • 21:30 Australian NAB Business Confidence. Actual plus-6

Tuesday (September 13)

  • 6:00 US NFIB Small Business Index. Estimate 94.9. Actual 94.4
  • 13:01 US 30-year Bond Auction
  • 14:00 US Federal Budget Balance. Estimate -98.0B
  • 20:30 Australian Westpac Consumer Sentiment 

Wednesday (September 14)

  • 21:30 Australian Employment Change. Estimate 15.2K
  • 21:30 Australian Unemployment Rate. Actual 5.7%

*All release times are EDT

* Key events are in bold

AUD/USD for Tuesday, September 13, 2016

AUD/USD September 13 at 8:45 EDT

Open: 0.7566 High: 0.7568 Low: 0.7506 Close: 0.7510

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.7200 0.7339 0.7440 0.7560 0.7701 0.7835
  • AUD/USD posted slight losses in the Asian and European sessions. The pair continues to lose ground in North American trade
  • 0.7440 is providing support
  • There is resistance at 0.7560
  • Current range: 0.7440 to 0.7560

Further levels in both directions:

  • Below: 0.7440, 0.7339 and 0.7200
  • Above: 0.7560, 0.7701, 0.7835 and 0.7938

OANDA’s Open Positions Ratio

AUD/USD ratio is unchanged in the Tuesday session. Currently, long positions have a strong majority (59%), indicative of trader bias towards AUD/USD reversing directions and gaining 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.