AUD/USD – Higher After Positive RBA Report

AUD/USD has edged lower in Tuesday trading. The pair dipped below the 1.04 line in the Asian session, and was trading in the 1.0370 range in the European session. The RBA released the minutes of its most recent policy meeting earlier. The minutes did not contain any dramatic news, but was cautiously optimistic in tone. The MI Leading Index will be released later on Tuesday.

In economic news, the RBA released its minutes from the most recent Monetary Policy Meeting. The central bank noted that the economy is responding well to low interest rates, and it plans to continue with an accommodative monetary policy. At the last meeting, the RBA kept its benchmark interest rate at 3.0%, and stated that the impact of policy easing needed to be maintained. The minutes stated that global economic conditions have improved, but the high Australian dollar continues to weigh on the economy.  Deputy Governor Philip Lowe weighed in on the Cyprus bailout, saying that the tax on bank deposits was a “step back” for the Eurozone and could lead to more financial instability, since the result could be a run on the banks by nervous depositors.

In Japan, the powerful BOJ is replacing governors, and the move is sure to have significant ramifications for the Japanese economy and currency. Haruhiko Kuroda, the incoming governor, is a strong proponent of monetary easing, and has been called a “dream choice” for Prime Minister Shinzo Abe, who wants to see further monetary easing in order to eliminate deflation and increase government spending. Abe has been a sharp critic of Shirakawa, who did not favor aggressive monetary easing. Kuroda has set a goal of 2% inflation within two years, and is expected to introduce additional easing, which will likely weaken the yen. The Japanese currency has already lost 20% against the US dollar, which has been a boon for Japanese exports. Although economic indicators continue to point to deflation in the economy, GDP was up slightly in Q4 of 2012, raising hopes that the government’s aggressive easing policy is starting to pay dividends.

 

AUD/USD for Tuesday, March 19, 2013

Forex Rate Graph 21/1/13
 

AUD/USD March 19 at 14:30 GMT

1.0265 H: 1.0267 L: 1.0215

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
1.0080 1.0174 1.0230 1.0334 1.0424 1.0568

 

AUD/USD has gained ground in the Tuesday session. The pair is receiving support at 1.0230. This is a weak line, and could face pressure if the pair retreats. This is followed by strong support at 1.0174. On the upside, 1.0334 is providing resistance. The next resistance line is 1.0424.

Current range: 1.0230 to 1.0334

Further levels in both directions:

  • Below: 1.0230, 1.0174, 1.0080 and 1.00
  • Above: 1.0334, 1.0424, 1.0568, 1.0605 and 1.0697

 

OANDA’s Open Position Ratios

The AUD/USD ratio is showing movement towards short positions in Tuesday trading. This is not reflected in the pair’s current movement, as the Aussie has posted gains against the US currency. If the current activity in the ratio continues, this would be an indication that trader sentiment favors a correction downwards.

The Australian dollar is showing some strength,  as the pair has pushed up to the mid-1.03 range. With the US releasing some important housing data later in the day, we could see some volatility from AUD/USD.

 

AUD/USD Fundamentals

  • 00:30 Reserve Bank of Australia Monetary Policy Meeting Minutes
  • 12:30 US Building Permits. Estimate 0.93M
  • 12:30 US Housing Starts. Estimate 0.92M
  • 23:30 Australian MI Leading Index

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.