AUD/USD – Little Activity Ahead of Key US Releases

AUD/USD is trading quietly on Thursday, as the pair trades in the mid-0.93 range in the European session. In economic releases, Australian New Motor Vehicles Sales improved in April. It’s a busy schedule in the US, with three major events – Core CPI, Unemployment Claims and the Philly Fed Manufacturing Index. As well, Federal Reserve chair Janet Yellen will speak at an event in Washington.

Low inflation levels have been a persistent problem in the US, and Fed chair Yellen highlighted this issue when speaking before Congress last week. Inflation levels are nowhere near the Fed’s target of 2.0%, and weak inflation is a sign of an underperforming US economy. There was good news as PPI, a key inflation indicator, edged higher in April, coming in at 0.6%. This easily beat the estimate of 0.2%. Core PPI also beat the estimate, posting a gain of 0.5%.

US Retail Sales and Core Retail Sales are key gauges of consumer spending, and are carefully tracked by the markets. Both indicators were weak in April. Core Retail Sales dropped to 0.0%, well off the estimate of 0.6%. Retail Sales followed suit, with a paltry gain of just 0.1%, compared to an estimate of 0.5%. The weak numbers could weigh on the US dollar, which has coughed up about 100 points to the Aussie in less than a week.

The Australian government released its first annual budget on Tuesday, introducing austerity measures in order to reduce the country’s debt. The government said that the cost-cutting measures will reduce the national debt of $49.9 billion to $29.8 billion by June 2015. The austerity budget will likely slow economic growth, which could have a negative impact on the Australian dollar.

AUD/USD for Thursday, May 15, 2014

AUD/USD May 15 at 12:55 GMT

AUD/USD 0.9366 H: 0.9393 L: 0.9363

AUD/USD Technical

• AUD/USD is steady on Thursday.
• 0.9361 is under strong pressure. Will the pair break below this line? This is followed by support at 0.9229.
• On the upside, 0.9446 is a strong line of resistance.

Further levels in both directions:

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

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in short positions in Thursday trading, continuing the direction we’ve seen for much of the week. This is not consistent with the movement of the pair, as the Australian dollar has posted small losses. The ratio currently has a majority of short positions, indicative of trader bias towards the Australian dollar losing ground.

AUD/USD is showing little movement on Thursday. The pair has edged lower in the North American session.

AUD/USD Fundamentals

• 12:30 US Core CPI. Estimate 0.1%.
• 12:30 US Unemployment Claims. Estimate 321K.
• 12:30 US CPI. Estimate 0.3%.
• 12:30 US Empire State Manufacturing Index. Estimate 5.5 points.
• 13:00 US TIC Long-Term Purchases. Estimate 32.3B.
• 13:15 US Capacity Utilization Rate. Estimate 79.2%.
• 13:15 US Industrial Production. Estimate 0.4%.
• 14:00 US Philly Fed Manufacturing Index. Estimate 13.9 points.
• 14:00 US Mortgage Delinquencies.
• 14:00 US NAHB Housing Market Index. Estimate 49 points.
• 14:30 US Natural Gas Storage. Estimate 99B.
• 23:00 Federal Reserve Chair Janet Yellen Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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