AUD/USD – Aussie Remains Unchanged After RBA Minutes

The Australian dollar is showing little movement on Tuesday, as the pair trades at 0.7254 in the North American session. Taking a look at economic releases, the RBA minutes noted that the Australian economy was improving and there was no need to cut rates in the near future. Australia will release two minor indices later in the day. In the US, housing numbers were a mix, as Building Permits missed expectations, while Housing Starts rose sharply.

At its most recent policy meeting, the RBA held rates at an even 2.00%, and the minutes of that meeting shed some light on the central bank’s thinking. Policymakers noted that the economy had shown some improvement, crediting this to the lower value of the Australian dollar, which has boosted exports, as well as ultra-low interest rate levels. The minutes noted concern about the China economy, but said that despite this, there was no need to lower rates for some time. Interestingly, policymakers said that some players in the financial markets don’t expect the Federal Reserve to raise rates for the “foreseeable future”.

The markets got their first look this week at key data from the US, as housing numbers sent the markets a mixed message. Building Permits dipped to 1.10 million in September, shy of the estimate of 1.16 million. This marked a 6-month low for the key indicator. There was much better news from US Housing Starts, which jumped to 1.21 million in the September report, easily beating the forecast of 1.14 million. There were mixed messages from US releases on Friday as well. UoM Consumer Sentiment, the primary gauge of consumer confidence, jumped to 92.1 points in October, up from 85.7 points. This easily beat the estimate of 88.8 points. At the same time, JOLTS Job Openings slipped to 5.37 million, way off the estimate of 5.77 million. The JOLTS release is especially important as it is watched closely by the Fed and is a factor in its decision-making process regarding monetary policy.

China has overtaken Japan as the world’s second largest economy, so when the Asian giant publishes data, the markets listen closely. Chinese GDP dipped to 6.9% in Q3, down from 7.0% in the past two quarters. Still, the markets preferred to view the cup as half full, noting that the forecast called for a gain of 6.8%. In an effort to spur growth, the Chinese central bank has cut interest rates five times since November an increased spending. The effect that China is having on the global economy and markets cannot be emphasized enough, and the Federal Reserve recently pointed at slower Chinese growth as a key factor in deciding not to raise US interest rates. Meanwhile, Chinese Industrial Production slipped to 5.7% in September, short of the estimate of 6.0%.

AUD/USD Fundamentals

Tuesday (Oct. 20)

• 12:30 US Building Permits. Estimate 1.16M. Actual 1.10M.
• 12:30 US Housing Starts. Estimate 1.14M. Actual 1.20M.
• 13:00 FOMC Member William Dudley Speaks.
• 13:15 FOMC Member Jerome Powell Speaks.
• 15:00 Federal Reserve Chair Janet Yellen Speaks.
• 23:00 Australian CB Leading Index.
• 23:30 Australian MI Index.

*Key releases are highlighted in bold

*All release times are GMT

AUD/USD for Tuesday, October 20, 2015

USD/JPY October 20 at 14:05 GMT

USD/JPY 0.7257 H: 0.7244 L: 0.7262

AUD/USD Technical

• 0.7213 remains a weak support level. The round number of 0.71 is stronger.
• 0.7440 is a strong resistance line.
• Current range: 0.7213 to 0.7440

Further levels in both directions:

• Below: 0.7213, 0.7100, 0.7060 and 0.70
• Above: 0.7440, 0.7664, 0.7770 and 0.7849

OANDA’s Open Positions Ratio

AUD/USD ratio is unchanged on Tuesday, as long positions continue to command a solid majority (54%), indicative of slight trader bias towards the Australian dollar moving to higher levels.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.