The Australian dollar has posted considerable gains on Tuesday, as AUD/USD trades at 0.6940 in the European session. There are no major US releases on Tuesday. Australia will release Westpac Consumer Sentiment. We’ll get a look at key US numbers on Wednesday, with the release of CPI and Building Permits.
The US dollar has hammered its minor rivals early in 2016, and the Australian dollar is no exception, as AUD/USD slipped 140 points late last week. AUD/USD is flirting with 11-year lows, and has plunged some 350 points in the month of January. Recent events in China have weakened the Aussie, with the Chinese stock market meltdown and the devaluation of the Chinese yuan spooking the markets. Meanwhile, Chinese GDP for the fourth quarter showed another drop, as the key indicator dipped to 6.8%, shy of the forecast of 6.9%. GDP for 2015 came in at 6.9%, the weakest gain in 25 years. Tensions throughout the Middle East have also contributed to significant movement away from minor currencies like the Aussie towards the safe-haven US dollar. With investors demonstrating little appetite for risk, the Australian dollar could slide even further.
With the Fed finally pressing the rate trigger in December, the markets are looking for hints of the timing of the next interest rate increase. A rate hike at next week’s policy meeting is not considered likely, coming so soon after the December move. A hike by the Fed in March is more probable, although this is contingent on a strong US economy. Although the economy is in good shape, one major area of concern is the inflation picture. Inflation levels have not kept up with other economic indicators and remain at low levels. Another concern is a lack of wage growth, despite a robust labor market. The Fed will be keeping a close eye on Wednesday’s CPI reports, and it’s a safe bet that policymakers will want to see stronger inflation numbers before signing on for another rate hike.
Tuesday (Jan. 19)
- 10:00 US NAHB Housing Market Index. Estimate 61 points
- 16:00 US TIC Long-Term Purchases
- 18:30 Australian Westpac Consumer Sentiment
Upcoming Key Events
Wednesday (Jan. 20)
- 8:30 US Building Permits. Estimate 1.20M
- 8:30 US CPI. Estimate 0.0%
- 8:30 US Core CPI. Estimate 0.2%
*Key releases are highlighted in bold
*All release times are EST
AUD/USD for Tuesday, January 19, 2016
AUD/USD January 19 at 6:50 EST
AUD/USD Open: 0.6872 Low: 0.6837 High: 0.6949 Close: 0.6943
- The pair has posted gains in the Asian and European sessions.
- 0.7063 is a strong resistance line
- 0.6931 has switched to a support role as the pair has posted gains
- Current range: 0.6931 to 0.7063
Further levels in both directions:
- Below: 0.6931, 0.6848, 0.6754 and 0.6625
- Above: 0.7063, 0.7100 and 0.7213
OANDA’s Open Positions Ratio
AUD/USD ratio is almost unchanged on Tuesday. Long positions continue to command a majority of positions (54%), indicative of trader bias towards the pair continuing to move higher.