AUD/USD – Remains Comfortable in mid-1.05 range

AUD/USD continues to have a quiet week, as the pair hovers around the 1.0550 level.   exhibits narrow range trading for the second straight day. Currently, the pair is trading in the 1.0550 range. In the US, retail sales numbers were strong, but manufacturing data disappointed. Australian data was positive, as Consumer Sentiment bounced back from a weak release in December, and posted a modest gain. There was more good news as New Motor Vehicle Sales rose, hitting a three month high. It is another busy day, with a host of US, releases, highlighted by US Core CPI. In Australia, the markets await the release of key employment data on Thursday.

Federal Reserve Chairman Bernard Bernanke had little to say about the current round of QE, but he did weigh in on the debt ceiling issue. Speaking at the University of Michigan, Bernanke urged Congress to raise the debt ceiling. Bernanke further noted that having the Federal Reserve tinker with interest rates will not make much difference to the economy. What is critical, he said, is that Congress ensures that the country’s fiscal house is in order. This would lead to higher interest rates as the economy improves.

The US is quickly approaching its debt limit of $16.4 trillion, and the issue promises to be a hot topic in Congress,  which is fresh off a bitter fight over the fiscal cliff. That battle left spending cuts and the debt for another day. Republicans have sounded the alarm about the staggering US debt and the crippling effect it can have on the economy. They have vowed to tie the debt ceiling to further spending cuts and want to see cuts to major federal programs such as Medicaid. The Democrats, led by President Obama, are adamantly opposed to cuts in federal programs, and want to deal the issues of the debt ceiling and spending cuts separately.

In the US, key data continues to paint a mixed picture. Retail Sales looked sharp, rising 0.5%. This beat the estimate of 0.2%, and was the biggest increase since October. Core Retail Sales also looked good, climbing 0.3%, and exceeding the market forecast of 0.2%. However, the news was not all good, as these positive numbers were not reflected in manufacturing data, which looked very weak. The Empire State Manufacturing Index dropped -7.8 points, shocking the markets, which had anticipated a gain of 1.9 points. This important index has posted consecutive declines since July, and points to serious weakness in the US manufacturing sector. In Australia, there was good news after Monday’s disappointing data. Consumer Sentiment, which had plunged in December, bounced back into positive territory, posting a gain of 0.6%. New Motor Vehicles posted a healthy gain of 2.2%, marking the first gain since October. The increase in the purchase of big-ticket items also points to greater consumer confidence in the Australian economy, as consumers appear more ready to open their wallets and spend.

AUD/USD for Wednesday, January 16, 2013

AUD/USD January 16 at 11:10 GMT

1.0556  H: 1.0580 L: 1.0532

AUD/USD Technical

AUD/USD continues to show little activity, as the pair appears comfortable in the mid-1.5 range. The proximate support and resistance lines (S1 and R1) continue to remain in place, with no sign of a breakout in either direction. On the downside, 1.0508, which is protecting the 1.05 line is the first line of support. This is followed by strong support at 1.0424. The line of 1.0568 is providing resistance, followed by 1.0605.

Current range: 1.0508 to 1.0568.

Further levels in both directions:
• Below: 1.0508, 1.0424, 1.0376, 1.0334, 1.0230 and 1.0174.
• Above: 1.0568, 1.0605, 1.0718, 1.0874 and 1.0961.

OANDA’s Open Position Ratios

The AUD/USD ratio is showing some movement, in the direction of long positions. Although the pair has been drifting over the course of the week, this movement in the ratio could signal that the Aussie will make a push upwards, towards the 1.06 line. The pair is quiet for now, but traders should continue to monitor the ratio.

AUD/USD continues to show little movement, a trend we have seen throughout the week. Some mixed data out of the US and positive Australian numbers failed to get the pair to budge, and we could see the pair continue to drift in the mid-1.05 range.

AUD/USD Fundamentals

• 00:30 Australian New Motor Vehicle Sales. Actual 2.2%.
• 13:30 US Core CPI. Estimate 0.2%.
• 13:30 US CPI. Estimate 0.0%.
• 14:00 US TIC Long-Term Purchases. Estimate 19.8B.
• 14:15 US Capacity Utilization Rate. Estimate 78.6%.
• 14:15 US Industrial Production. Estimate 0.2%.
• 15:00 US NAHB Housing Market Index. Estimate 48 points.
• 13:30 US Crude Oil Inventories. Estimate 2.0M.
• 19:00 US Beige Book.

*Key releases are highlighted in bold

*All release times are GMT

*Key releases are highlighted in bold
*All release times are GMT

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.