AUD/USD – Steady on Mixed Australian Consumer Inflation Reports

AUD/USD continues to have a quiet week, as the pair trades in the mid-0.79 range on Wednesday. On the release front, Australian CPI slipped to 0.2%, but Trimmed Mean CPI improved to 0.7%. In the US, the Federal Reserve will issue its monthly policy statement. The other event on the schedule is Crude Oil Inventories, with the markets expecting a strong downturn in the upcoming report.

The Australian dollar shrugged off mixed CPI numbers for the fourth quarter. CPI, the primary gauge of consumer inflation, dropped to just 0.2% in Q4, shy of the forecast of 0.3%. This was the index’s weakest gain in two years. However, there was much better news from Trimmed Mean CPI, which posted a strong gain of 0.7%, beating the estimate of 0.5%. We’ll get a look at PPI on Friday, with the markets expecting a slight gain of 0.3%.

The Federal Reserve will be in the spotlight on Wednesday, with the release of a policy statement at the end of a two-day meeting. The Fed is expected to continue to counsel patience regarding an interest rate hike, and persistently weak inflation means the Fed can take its time before having to make a monetary move. The markets will be combing through the statement and any clues as to the timing of rate hike could shake up the currency markets.

There was mixed numbers out of the US on Tuesday. Durable Goods Orders plunged 3.4%, marking a 4-month low. There was no relief from Core Durable Goods Orders, which declined by 0.8%, its fifth drop in six readings. The markets had expected gains from both indicators. There was much better news later in the day, as CB Consumer Confidence jumped to 102.9 points, crushing the estimate of 95.3 points. New Home Sales followed suit, rising to 481 thousand, well above the forecast of 452 thousand.

AUD/USD for Wednesday, January 28, 2015

AUD/USD January 28 at 15:15 GMT

AUD/USD 0.7957 H: 0.8025 L: 0.7900

AUD/USD Technical

• AUD/USD posted sharp gains in the Asian session. The pair retracted in European trade. Early in the North American session, the pair is unchanged.
• 0.7904 is an immediate support line. It was tested early in the Asian session.
• 0.8081 remains a strong resistance line.
• Current range: 0.7904 to 0.8081

Further levels in both directions:

• Below: 0.7904, 0.7799. 0.7684 and 0.7528
• Above: 0.8081, 0.8150, 0.8214, 0.8315 and 0.8456

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in short positions on Wednesday. This is not consistent with the movement of the pair, as the Aussie has posted small gains. The ratio has a majority of long positions, indicative of trader bias towards AUD/USD moving higher.

AUD/USD Fundamentals

• 00:30 Australian CPI. Estimate 0.3%. Actual 0.2%.
• 00:30 Australian Trimmed Mean CPI. Estimate 0.5%. Actual 0.7%
• 15:30 US Crude Oil Inventories. Estimate 4.2M
• 19:00 US FOMC Statement
• 19:00 US Federal Funds Rate. Estimate <0.25%

*Key releases are highlighted in bold

*All release times are GMT

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