AUD/USD – Rangebound as Markets Await Australian CPI

AUD/USD continues to have a slow week, as the pair trades in the mid-0.92 range in Tuesday’s European session. AUD/USD pushed above the 0.92 level late last week, and seems comfortable in the present range. In economic releases, it feels like summer, with only two releases on Tuesday both out of the US. Australia will release CPI, one of the most important economic indicators, early on Wednesday. This inflation index is considered one of the most important indicators, and could result in the pair breaking out from its current drifting. On Monday, US Existing Home Sales was a disappointment dropping from 5.18 million to 5.08 million. This surprised the markets, which had anticipated a strong showing of 5.27 million.

On Tuesday, the markets will be keeping a close watch on the Richmond Manufacturing Index. Although this indicator is considered a minor release, traders should keep in mind that it can have an impact on the currency markets, as it helps provide analysts with a snapshot of the health and direction of the US manufacturing sector. The indicator looked very sharp last month, recovering from two poor releases. Last week, US manufacturing data was sharp, as Empire State Manufacturing Index and Philly Fed Manufacturing Index both surpassed their estimates. If the Richmond indicator can keep pace, it could signal that the manufacturing industry, which has been a sore spot in the US recovery, is on the right track. This would be good news for the US dollar.

The G20, which includes Australia, wrapped up a meeting of finance ministers and central bankers over the weekend in Moscow. Monetary policy was high on the agenda, as the delegates released a statement that future monetary policy moves would be “carefully calibrated and clearly communicated”. This is in response to the recent market turmoil which followed after statements out of the Federal Reserve with regard to QE tapering. The Fed has not always sounded consistent regarding its QE intentions, and predictably, the resulting uncertainty led to all sorts of speculation and rocked the markets. Leaders of the G20 will meet in St. Petersburg in September, and a final draft statement from the Moscow meeting said that a plan to increase jobs and growth and rebalance debt would be ready in time for the September meeting.

 

AUD/USD for Tuesday, July 23, 2013

Forex Rate Graph 21/1/13
 

AUD/USD July 23 at 8:30 GMT

AUD/USD 0.9260 H: 0.9285 L: 0.9249

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.9072 0.9135 0.9221 0.9328 0.9405 0.9541

 

AUD/USD is trading in a narrow range in Tuesday trading, as the proximate support and resistance levels remain intact (S1 and Ra above). We continue to see support for the pair at 0.9221. This is a weak line, and could face more pressure if the Aussie loses ground. This is followed by a strong support level at 0.9135. On the upside, 0.9328 continues to provide strong resistance. This line has remained intact since late June. This is followed by resistance at 0.9405.

  • Current range: 0.9221 to 0.9328

 

Further levels in both directions:

  • Below: 0.9221, 0.9135, 0.9072, 0.9000, 0.8916 and 0.8747
  • Above: 0.9328, 0.9405, 0.9541 and 0.9657

 

OANDA’s Open Positions Ratio

AUD/USD ratio is back in action in Tuesday trading, as we see movement towards short positions. This is not reflected in what we are seeing from the pair, which is showing very little movement. The ratio continues to have a substantial majority of long positions, pointing to trader bias in favor of the Australian dollar moving upwards.

The Australian dollar continues to tread softly and trade quietly, staying close to the mid-0.92 range. Will the rangebound trading continue, or will the pair break out? Australian CPI will be released early on Wednesday, and the markets are expecting a slight rise from the key indicator. We could see some activity from the pair if market expectations are not met.

 

AUD/USD Fundamentals

  • 13:00 US HPI. Estimate 0.9%.
  • 14:00 US Richmond Manufacturing Index. Estimate 7 points.

 

*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.

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.