AUD/USD – Aussie Jumps after RBA Minutes Release

The Australian dollar jumped on Tuesday, after the release of the minutes of the RBA’s most recent policy minutes. The report pointed to weakening in the central bank’s easing bias. AUD/USD has responded by gaining over one cent, as it trades above the 0.92 level in the North American session. In the US, inflation indicators looked positive. Core CPI matched the forecast, while CPI climbed to a four-month high.

The Aussie has soared higher, taking advantage of the release of the minutes from the RBA’s last policy meeting. At that time, the RBA maintained the key interest rate at 2.75%. The minutes stated that the Australian dollar’s recent decline and previous interest rate cuts meant that the current rate level was appropriate. This appears to lessen the likelihood that the RBA will lower rates in August, and the Australian dollar received a much-needed boost as a result.

On Monday, Australian New Motor Vehicles jumped 4.0% in June, its sharpest gain since October 2012. Increased sales of motor vehicles points to consumers who are more optimistic about the economy and are purchasing big-item tickets such as cars and trucks. The news was not as good out of China, which saw Q2 GDP drop to a three-month low. The key indicator slipped to 7.5% from 7.7%, and missed the forecast of 7.7%. The Aussie is often sensitive to key Chinese releases, since the Asian giant is Australia’s number one trading partner.

Over in the US, the Federal Reserve was in the spotlight last week, after the release of the Fed’s most recent policy meeting. This led to plenty of turbulence in the markets, with the US dollar losing ground against the major currencies. The minutes indicated that Federal Reserve policymakers remain deeply divided over when to scale down the current round of QE, whereby the Fed purchases $85 billion in assets each month. About half of the Fed policymakers favor scaling down QE before the end of 2013, while others feel that the employment market is still too fragile for the Federal Reserve to take any action. The dollar continued to lose ground as Federal Reserve chair Bernanke gave a speech in which he said that the Fed would maintain a loose monetary policy for the foreseeable future, due to low levels of inflation and a high US unemployment rate.  If US employment numbers show further improvement, the Federal Reserve will again be under pressure to taper QE. With Bernanke scheduled to testify on Wednesday before a congressional committee, QE will be on the agenda, we could see some further volatility in the currency markets. 

AUD/USD for Tuesday, July 16, 2013

AUD/USD July 16 at 15:15 GMT

AUD/USD 0.9220 H: 0.9238 L: 0.9091

AUD/USD Technical

AUD/USD has jumped in Tuesday trading. The pair posted sharp gains in the Asian session and has continued to push higher, as it crossed above the 0.92 line in the European session. AUD/USD is testing resistance at 0.9221. This line was briefly breached earlier and could fall if the Aussie continues its upwards trend. This is followed by resistance at 0.9328. On the downside, the pair is receiving support at 0.9135. This is followed by a support level at 0.9072, which is protecting the round number of 0.90.

• Current range: 0.9135 to 0.9221

Further levels in both directions:

• Below: 0.9135, 0.9072, 0.9000, 0.8916, 0.8747 and 0.8578
• Above: 0.9221, 0.9328, 0.9405 and 0.9541

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to strong movement towards short positions. This is a result of the sharp climb by AUD/USD on Tuesday, which has resulted in numerous long positions being covered, thus increasing the proportion of open short positions. Even with this movement in the ratio, long positions continue to enjoy a sizeable majority.

AUD/USD has looked sharp on Tuesday, posting strong gains and climbing past the 0.92 level. Will the Aussie’s upward momentum continue? We could be in for more activity from the pair on Wednesday, as Fed Reserve head Bernanke testifies in Washington. Also, the US will release Building Permits, a key release.

AUD/USD Fundamentals

• 1:30 RBA Monetary Policy Meeting Minutes.
• 12:30 US Core CPI. Estimate 0.2%. Actual 0.2%. 
• 12:30 US CPI. Estimate 0.3%. Actual 0.5%.
• 13:00 US TIC Long-Term Purchases. Estimate 14.3B. Actual -27.2B.
• 13:15 US Capacity Utilization Rate. Estimate 77.8%. Actual 77.8%.
• 13:15 US Industrial Production. Estimate 0.2%. Actual 0.3%.
• 14:00 US NAHB Housing Market Index. Estimate 51 points. Actual 57 points.
• 18:15 US FOMC Member Esther George Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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