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AUD/USD – Aussie Remains Weak After RBA Minutes

AUD/USD continues to struggle, as the pair trades in the low-0.89 range in Tuesday trading. These are the lowest levels we’ve seen for the Aussie since late August. The currency got no help from the RBA minutes, which stated that the RBA was maintaining the option to reduce interest rates. In other economic news, it was a good day for Australian releases, as the CB Leading Index and New Motor Vehicle Sales both climbed higher in November. Later on, RBA Governor Glenn Steven will testify before a parliamentary committee. In the US, today’s highlight is Core CPI.

The RBA minutes were released on Tuesday, and there wasn’t much good news as far as the Aussie was concerned. The Bank stated that a lower value for the currency would likely be required to “achieve balanced growth”. The RBA continues to try and “talk down” the Australian dollar, which has now shed about 12% of its value in 2013. The minutes noted that the RBA was maintaining interest rates but did not want to close off the possibility of a reduction if this could boost growth. Meanwhile, Australian releases looked solid, with the CB Leading Index gaining 0.5% and New Motor Vehicles climbing 1.8%, a five-month high. However, the positive news was not enough to prop up the struggling Australian dollar.

The markets are keeping a close watch on the US Federal Reserve, which meets for a two-day policy meeting starting on Tuesday. The million dollar question is whether the Fed will taper QE. Although there’s a stronger likelihood that the Fed will wait until after the new year, Bernard Bernanke’s swan song could surprise the markets if the Fed does take QE action this week. Currently, the Fed is purchasing $85 billion in assets every month, and a Fed taper will likely boost the US dollar against the major currencies.

There was some good news out of the US on the fiscal front, as the House of Representatives easily passed a budget deal on Thursday. The agreement, which will be voted on by the Senate this week, will remove the risk of a government shutdown and reduces the deficit by a modest $23 billion. Democrats and Republicans both had criticism of the proposal, but there is general agreement in Washington that the compromise reached is a positive step which removes some of the fiscal uncertainty we’ve seen in recent months.

 

AUD/USD for Tuesday, December 17, 2013

Forex Rate Graph 21/1/13

AUD/USD December 17 at 13:30 GMT

AUD/USD 0.8922 H: 0.8958 L: 0.8914

 

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.8658 0.8735 0.8893 0.9000 0.9119 0.9229

 

 

Further levels in both directions:

 

OANDA’s Open Positions Ratio

AUD/USD ratio is unchanged in Tuesday trading. This is reflected in the current movement of the pair, which is showing very little activity. The ratio is made up of a substantial majority of long positions, reflecting a trader bias towards the Australian dollar moving higher.

The Australian dollar is trading quietly in the low-0.89 range on Tuesday. With the US releasing key inflation numbers later in the day, we could see some movement from the pair during the North American session.

 

AUD/USD Fundamentals

 

*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 [4]

Market Analyst at OANDA [5]
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including Investing.com, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

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