AUD/USD – Little Movement Ahead of Fed Statement

AUD/USD is almost unchanged on Wednesday, as the pair trades just under the 0.78 line. On the release front, Building Permits missed the estimate with a reading of 1.08 million, while PPI posted a sharp decline of 0.8%. Later in the day, the Federal Reserve will release then minutes of its most recent policy meeting. There are no Australian releases on Wednesday.

The first key US readings of the week did not impress. Building Permits improved to 1.05 million, but this fell short of the estimate of 1.08M. Housing Starts matched the forecast of 1.07 million, down from 1.09 a month earlier. On the inflation front, PPI was dismal, coming in at -0.8%. This was short of the forecast of -0.4% and marked the indicator’s fourth decline in five months, as the US continues to struggle with weak inflation.

The markets are keeping a close eye on the Fed minutes, which will be released later on Wednesday. With the US economy showing strong growth and positive employment numbers, there are widespread expectations for a rate hike as early as the summer. Any hints regarding a hike could provide a strong boost for the US dollar against its major rivals.

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 drop 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 Wednesday, February 18, 2015

AUD/USD February 18 at 14:45 GMT

AUD/USD 0.7810 H: 0.7832 L: 0.7785

AUD/USD Technical

• AUD/USD was flat in the Asian session. The pair edged lower in European trade. AUD/USD is unchanged early in North American session.
• 0.7904 is an immediate resistance line.
• On the downside, 0.7799 is under strong pressure. Will the pair break below this line in the North American session? 0.7684 is a strong support level.
• Current range: 0.7799 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

(Shows the ratio of long vs. short positions held for the AUD/USD among all OANDA clients. The left percentage (blue) shows long positions; the right percentage (orange) shows short positions.)

AUD/USD ratio is unchanged on Wednesday, continuing the lack of movement which has marked the ratio throughout the week. This is consistent with the pair’s lack of movement. The ratio has a majority of long positions, indicative of trader bias towards the Australian dollar moving higher.

AUD/USD Fundamentals

• 13:30 US Building Permits. Estimate 1.08M. Actual 1.05M.
• 13:30 US PPI. Estimate -0.4%. Actual -0.8%.
• 13:30 US Core PPI. Estimate 0.1%. Actual -0.1%.
• 13:30 US Housing Starts. Estimate 1.07M. Actual 1.07M.
• 14:15 US Capacity Utilization Rate. Estimate 79.9%. Actual 79.4%.
• 14:15 US Industrial Production. Estimate 0.5%. Actual 0.2%.
• 19:00 US FOMC Meeting Minutes.
• 21:00 US TIC Long-Term Purchases. US 41.3B.
• 22:00 US FOMC Member Jerome Powell Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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