AUD/USD – Aussie Tumbles On Disappointing CPI

AUD/USD has registered sharp drops on Wednesday, as the pair trades in the mid-0.92 range early in the North American session. The Aussie has lost about 100 points following a weak Australian CPI release, which fell to a three-month low. Over in the US, the major event of the day is New Home Sales. The markets are anticipating a stronger reading for the March release.

Australia’s highlight event of the week was CPI, one of the most important consumer indicators. The indicator is released each quarter, magnifying the impact of each release. The index proved once again to be a market-mover, as the Australian dollar slipped badly, as CPI posted a gain of 0.6% in Q1, falling short of the estimate of 0.8%. CPI has now dropped for a second straight quarter, and is sharply down from its gain of 1.2% in Q3 of 2013.

US Existing Home Sales edged lower in March, dropping to 4.59 million, down from 4.60 million a month earlier. However, it did beat the estimate of 4.57 million, marking the first time that the indicator has beaten the forecast since August. There was also good news form the manufacturing sector, as the Richmond Manufacturing Index jumped to 7 points, crushing the estimate of 0 points.

The markets haven’t reacted to events in Ukraine so far, but that could change if the violence in the east of the country worsens. Russian President Vladimir Putin has threatened to act on his “right” to invade Ukraine, and has also given the country an ultimatum regarding its gas debt. The gas supply from Russia to western Europe is in danger, and if the situation spills out of control, we could see a sharp response from the markets. US Vice-President Joe Biden is in Kiev for a symbolic visit. The West doesn’t have many cards to play against Russia, so every move by Putin will be scrutinized and could impact on the markets.

AUD/USD for Wednesday, April 23, 2014

AUD/USD April 23 at 13:30 GMT

AUD/USD 0.9269 H: 0.9377 L: 0.9268

AUD/USD Technical

• AUD/USD has reversed directions on Wednesday, posting sharp losses. The pair broke below the 0.93 line during the Asian session and has edged lower in European trading.
• 0.9229 has weakened as the pair trades at lower levels. There is stronger support at 0.9119, which is protecting the 0.91 line.
• On the upside, 0.9361 has some breathing room and is strong resistance line.
• Current range: 0.9229 to 0.9361.

Further levels in both directions:

• Below: 0.9229, 0.9119, 0.9000 and 0.8893
• Above: 0.9361, 0.9446, 0.9542, 0.9617 and 0.9703

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in short positions on Wednesday. This is consistent with the movement of the pair, which has dropped sharply. The ratio has a majority of long positions, indicative of trader bias towards the Australian dollar reversing its current downward movement.

AUD/USD has posted sharp losses in Wednesday trading. The Australian dollar remains under pressure early in the North American session.

AUD/USD Fundamentals

• 1:30 Australian CPI. Estimate 0.8%. Actual 0.6%.
• 1:30 Australian Trimmed Mean CPI. Estimate 0.7%. Actual 0.5%.
• 13:45 US Flash Manufacturing PMI. Estimate 56.2 points.
• 14:00 US New Home Sales. Estimate 455K.
•  14:30 US Crude Oil Inventories. Estimate 2.6M.

*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.