The Australian dollar is showing limited movement on Tuesday, as AUD/USD trades at 0.7130 at the start of the North American session. In economic news, the RBA minutes signaled that a rate cut is unlikely in the near future. In the US, consumer inflation reports matched estimates, as both CPI and Core CPI posted small gains of 0.2%.
The week started out with rather unimpressive numbers from Australia and the US. Australian New Motor Vehicle Sales, an important gauge of consumer spending, posted a sharp decline of 3.6% in October. It was the third decline in the past four readings, pointing to weakness in consumer spending. This could spell bad news for the economy, as consumer spending is a key driver of economic growth.
Meanwhile, the Fed watch continues, as speculation has increased that the Federal Reserve will begin a series of rate hikes, commencing in December. Fed Chair Janet Yellen has called the December meeting a “live possibility” of a rate hike. With the US economy close to full employment and many economic indicators pointing upwards, one of the last pieces in the puzzle is consumer inflation, which will be released later on Tuesday. The October CPI and Core CPI reports could play a crucial factor in determining whether the Fed makes a move and raises rates next month, and should be treated by traders as market-movers. Strong CPI readings could win over Fed policymakers who are concerned about whether the economy is strong enough to withstand a rate hike, while figures below the forecast would dampen expectations of a rate move before 2016. Traders should be prepared for volatility after the CPI releases.
The RBA released the minutes of its last policy meeting, at which time the central bank maintained interest rates at an even 2.00%. The minutes noted that the economy had showed some improvement, thanks in part to a weaker Australian dollar. However, spare capacity remained, and wage growth and inflation levels were lower than hoped for. Given the current economic environment, the RBA said that a rate cut was unnecessary. The minutes should dampen any speculation about a rate cut in the coming months, and should ease some of the downward pressure on the Australian dollar.
Tuesday (Nov. 17)
- 00:30 RBA Monetary Policy Meeting Minutes
- 13:30 US CPI. Estimate 0.2%. Actual 0.2%
- 13:30 US Core CPI. Estimate 0.2%. Actual 0.2%
- 14:15 US Capacity Utilization Rate. Estimate 77.5%
- 14:15 US Industrial Production. Estimate 0.1%
- 15:00 US Mortgage Delinquencies
- 15:00 US NAHB Housing Market Index. Estimate 64 points
- 21:00 US TIC Long-Term Purchases
- 22:15 RBA Assistant Governor Guy Debelle Speaks
- 23:00 Australian CB Leading Index
- 23:30 Australian MI Leading Index
Upcoming Key Events
Wednesday (Nov. 18)
- 13:30 US Building Permits. Estimate 1.15M
- 19:00 US FOMC Meeting Minutes
*Key releases are highlighted in bold
*All release times are GMT
AUD/USD for Tuesday, November 17, 2015
AUD/USD November 17 at 13:30 GMT
AUD/USD 0.7130 H: 0.7136 L: 0.7072
- AUD/USD was flat in the Asian session and has posted gains in European trade.
- The round number of 0.71 remains busy this week. The line has switched to a support role after gains by the pair on Tuesday. Will the pair see more action in the North American session?
- 0.7213 is an immediate resistance line.
- Current range: 0.7100 to 0.7213
Further levels in both directions:
- Below: 0.7100, 0.7063, 0.7000 and 0.6931
- Above: 0.7213, 0.7440 and 0.7526
OANDA’s Open Positions Ratio
AUD/USD ratio is showing long positions with a slight majority (53%), which is indicative of a slight trader bias in favor of the Australian dollar continuing to move to higher levels.