The currency markets are in a holding pattern on Wednesday, ahead of the much-anticipated Federal Reserve policy statement later in the day. Early in the North American session, the pair is trading in the mid-0.93 range. In economic releases, Australian MI Leading Index looked weak, posting its first decline in eight months. Over in the US, Current Account disappointed, as the deficit shot higher in May. Today’s highlight is the Federal Reserve policy statement and follow-up press conference.
All eyes are on the Federal Reserve on Wednesday, as the US central bank will release a policy statement later in the day. The Fed is expected to trim its QE program by another $10 billion, which would reduce the asset purchase scheme to $35 billion/month. The big question is when the Fed will raise interest rates, but Fed chair Janet Yellen is unlikely to shed much light on that issue. If, as expected, QE is wound up in 2014, we could see a rate hike in the first half of 2015. However, cuts to QE are dependent on the health of the US economy, which continues to move in the right direction, despite some bumps in the road.
Australian Leading Indexes were listless in May, and point to a slowdown in the economy. The MI Leading Index managed a paltry gain of 0.1%, its highest level in 2014. The CB Leading Index posted a decline of 0.1%, its worst showing since last September. Australia’s key export sector is being squeezed by falling commodity prices while the high Australian dollar is making Australian goods less competitive on global markets. At the same time, consumer confidence and spending remains at very low levels. If key economic data points downward, the high-flying Aussie could lose ground.
The news out of the US was mixed on Tuesday. Building Permits dropped to 0.99M, well below the estimate of 1.07M. On the inflation front, CPI moved up modestly, posting a gain of 0.3%. This was the strongest gain we’ve seen since January 2013. CPI followed suit, climbing to an eleven-month high. The index rose to 0.4%, beating the estimate of 0.2%.
AUD/USD for Wednesday, June 18, 2014
AUD/USD June 18 at 13:50 GMT
AUD/USD 0.9343 H: 0.9347 L: 0.9328
- AUD/USD is flat in Wednesday trade.
- 0.9229 is providing strong support.
- 0.9361 is a weak resistance line and could face pressure during the day. 0.9446 is stronger.
Further levels in both directions:
- Below: 0.9229, 0.9119, 0.9000 and 0.8923
- Above: 0.9361, 0.9446, 0.9617 and 0.9757
OANDA’s Open Positions Ratio
AUD/USD ratio is pointing to gains in long positions in Wednesday trading. This is consistent with the movement of the pair, as the Australian dollar has posted small gains. The pair is close to an even split between open and short positions, indicative of a lack of trader bias towards the future movement of AUD/USD.
AUD/USD is showing little movement on Wednesday. The pair is unchanged in the North American session.
- 00:30 Australian CB Leading Index. Actual -0.1%.
- 00:30 Australian MI Leading Index. Actual +0.1%.
- 12:30 US Current Account. Estimate -96B. Actual -111B.
- 14:30 US Crude Oil Inventories. Estimate -0.6M.
- 18:00 US FOMC Economic Projections.
- 18:00 US FOMC Statement.
- 18:00 US Federal Fund Rate. Estimate <0.25%.
- 18:30 US FOMC Press Conference.
*Key releases are highlighted in bold
*All release times are GMT
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