Week in FX Asia – AUD/USD Continues to Rise as US Data Under Performs

The Australian dollar had a volatile week. After stoping a downward trend on August 13 it seemed the currency was headed to the 0.92 resistance level. Instead US data, though weak, deflated the Aussie above 0.91. this reversal came during the Americas session where the AUD continued to climb until almost recovering fully on Friday.

The market continues to speculate on when the Fed tapering will begin. The stronger the economic indicators out of the US are the case for tapering strengthens along with the USD. This week the opposite happened. Weak numbers, although to be fair not that far off expectations, drove the USD down versus in major pairs.

The AUD received a further boost by commodities. Metals and energy received a boost from the tapering speculation as well as geo political events that could constrain supply.

Indian Rupee touches all time low

The INR continues to slide versus the USD. The government and the central bank have tried their best to defend the currency. The INR continues to be sold as capital continues to leave India. The outflows are further complicating the trade deficit as a weak currency has affected import prices with a direct inflationary impact.

The government on one hand is trying to device a plan to attract investment while modifying the limits of allowable outflows. This sends a mixed signal to investors. Bring your money, but don’t take it out. Due to the lack of confidence given the economic slowdown in India, not a lot of investors are willing to add to the local economy if there are new limits being imposed on a regular basis.


* AUD RBA Meeting’s Minutes
* USD FOMC Minutes
* USD Jackson Hole Symposium
* EUR German Gross Domestic Product
* CNY China Flash PMI
* EUR Germany Flash Manufacturing PMI
* EUR France Flash Manufacturing PMI
* GBP United Kingdom Gross Domestic Product
* CAD Canada Consumer Price 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.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza