AUD/USD Australian Consumer Sentiment Drops Currency Trading at 0.9450

AUD/USD is showing little activity in Wednesday trading. The pair is trading around the 0.9450 in the European session. Australian Westpac Consumer Sentiment disappointed, posting a decline of -2.1%. In economic news, today’s highlight is the minutes from the Fed’s last policy meeting. There are reports that President Obama will nominate Federal Reserve Vice Chairwoman Janet Yellen to head the Federal Reserve early next year, and the president is expected to make a statement later in the day. There are no Australian releases on Wednesday.

In Australia, Westpac Consumer Sentiment dropped by 2.1%, its first decline since June. This was in contrast to Business Confidence, which jumped to 12 points, its highest level in over two years. Australian data continues to be mixed, and the Aussie will find it tough to post gains if economic numbers continue to point in all directions.

The US dollar posted broad gains following media reports that President Obama will nominate Susan Yellen to replace Bernard Bernanke as chairman of the Federal Reserve. Bernanke is due to retire early in 2014, and Yellen, who serves as Fed vice-chairwoman, became the leading candidate after Lawrence Summers withdrew his candidacy. Yellen is considered dovish in stance and has supported Bernanke in three rounds of QE increases. Meanwhile, the markets will be paying close attention to the release of the FOMC minutes later today, looking for more clarity about the Fed’s position on QE tapering.

The US shutdown has now entered its second week, and the Republicans and Democrats continue to play the blame game. Neither side is showing any flexibility, at least in front of the cameras. Polls show that most of the public blames the Republicans for the impasse, and this is likely increasing the pressure on the Republicans to agree to pass the budget so that the government can resume operating. The economic damage from the shutdown is not expected to be substantial, but the political fallout of this crisis will likely be significant.

As the shutdown drags on, Congress needs to deal urgently with another brewing crisis – the debt ceiling. The US has a debt worth $16.7 trillion, and will run out of funds to service the debt by October 17, unless Congress authorizes raising the debt ceiling. Otherwise, the US could potentially default on its obligations, which could cause chaos in the domestic and international markets. There is a lot of bad blood between the Republicans and Democrats over the shutdown, and this will undoubtedly complicate negotiations over the debt ceiling. With just a week to go until the debt ceiling is reached, the markets could get volatile if the politicians in Washington don’t get their act together quickly.

AUD/USD for Wednesday, October 9, 2013

AUD/USD October 8 at 12:35 GMT

AUD/USD 0.9451 H: 0.9464 L: 0.9414

AUD/USD Technical

• AUD/USD is trading quietly in the mid-94 range in Wednesday trading.
• The pair continues to face resistance at 0.9508. This is followed by a resistance line at 0.9613.
• On the downside, the pair is receiving support at the round number of 0.9400. There is stronger support at 0.9328.
• Current range: 0.9400 to 0.9528

Further levels in both directions:

• Below: 0.9400, 0.9328, 0.9221, 0.9135 and 0.9089
• Above: 0.9508, 0.9613, 0.9700 and 0.9821

OANDA’s Open Positions Ratio

AUD/USD is unchanged in Wednesday trading, continuing the trend we saw yesterday. This is reflected in the current movement of the pair, which is showing little movement.

The pair continues to trade quietly. We could see some movement in the North American session, as the US releases the minutes of the previous FOMC meeting later in the day.

AUD/USD Fundamentals

• 14:00 US FOMC Member Charles Evans Speaks.
• 14:30 US Crude Oil Inventories. Estimate 0.9M.
• 17:01 US 10-year Bond Auction.
• 18:00 US FOMC Meeting Minutes.
• 19:00 President Obama Speaks. Obama is expected to nominate Susan Yellen to head the Federal Reserve.

*Key releases are highlighted in bold

*All release times are GMT

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