AUD/USD – Aussie Posts Gains Despite Downbeat RBA Minutes

AUD/USD has posted modest gains on Tuesday, as the pair trades in the low-0.78 range early in the North American session. On the release front, the RBA released the minutes of its last policy meeting. Later in the day, Australia releases two minor events, CB Leading Index and the MI Leading Index. In the US, the Empire State Manufacturing Index slipped to 7.8 points, missing expectations.

In the US, Empire State Manufacturing Index slipped to 7.8 points in February, down sharply from 10.0 points a month earlier. The markets had expected a reading of 8.9 points. This weak reading follows last week’s disappointing reports from retail sales and consumer confidence. On Wednesday, we could see some movement from AUD/USD with the release of three key events – the Federal Reserve minutes, Building Permits and PPI.

The RBA minutes pointed to continuing weakness in the Australian economy. The minutes stated that the RBA expects economic growth to remain weak and unemployment to rise. However, bank policymakers discussed whether to delay last week’s surprise rate cut, which lessens the likelihood of another cut in March. Last week, RBA Governor Glenn Stevens said that economic growth remains lower than the RBA would like and that lowering interest rates may not be enough to spur growth. If the RBA is indeed hinting that no rate cuts are planned for the near future, the Aussie could recover some recent losses to its US counterpart.

Underscoring the RBA’s concerns about the economy, Australian employment data softened in January. Employment Change dropped by 12.2 thousand, well off the estimate of -4.7 thousand. This marked the first decline since September. The employment rate was unexpectedly higher, climbing to 6.4%, up from 6.1% a month earlier. The estimate stood at 6.2%.

AUD/USD for Tuesday, February 17, 2015

AUD/USD February 17 at 14:25 GMT

AUD/USD 0.7822 H: 0.7828 L: 0.7742

AUD/USD Technical

• AUD/USD edged higher in the Asian session. This trend continued in the European session, breaking above resistance at 0.7799.
• 0.7904 is an immediate resistance line.
• 0.7799 is a weak support line. 0.7684 is stronger.
• Current range: 0.77799 to 0.7904

Further levels in both directions:

• Below: 0.7799, 0.7684, 0.7582, 0.7403 and 0.7265
• Above: 0.7904, 0.8081, 0.8150 and 0.8214

OANDA’s Open Positions Ratio

AUD/USD ratio is unchanged on Tuesday, following the lack of movement seen a day earlier. This is not consistent with the pair’s movement, as the Aussie has posted slight gains. The ratio has a majority of long positions, indicative of trader bias towards the Australian dollar continuing to move higher.

AUD/USD Fundamentals

• 00:30 RBA Monetary Policy Meeting Minutes.
• 13:30 US Empire State Manufacturing Index. Estimate 8.9 points. Actual 7.8 points.
• 15:00 US NAHB Housing Market Index. Estimate 58 points.
• 21:00 US TIC Long-Term Purchases. Estimate 41.3B.
• 23:00 Australian CB Leading Index.
• 23:00 Australian MI Leading Index.

*Key releases are highlighted in bold

*All release times are GMT

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