The Australian dollar has posted slight gains on Tuesday, as AUD/USD trades at 0.7140 early in the North American session. In economic news, the US continues to post weak manufacturing data. The Empire State Manufacturing Index posted a weak reading of -16.6 points, well below the estimate. We’ll get a look at some key US data on Wednesday, with the release of Building Permits and PPI. As well, the Federal Reserve will publish the minutes of its January policy meeting.
The Aussie had little reaction and remained steady following the release of the minutes of the RBA’s most recent monetary policy meeting. The minutes didn’t contain anything unexpected, and reiterated the central bank’s view that the Australian economy has shown modest improvement, but concerns remain over the strength of the Chinese economy, which has softened in 2016. The RBA continues to monitor the inflation picture and said that it was prepared to cut rates from the current level of 2.00%, if necessary.
The markets were all ears last week, as Federal Reserve Chair Janet Yellen testified before both houses of Congress. Yellen’s message was markedly different than the upbeat statement from the Fed back in the heady days of December. At that time, the Fed raised rates by 0.25%, the first upward move in a decade, and hinted at a series of rate hikes in 2016. Fast forward to February, and Yellen discussed negative interest rates. The Fed has rejected making such a move in the past, and this is unlikely to change. Still, it is a relevant scenario, with the Bank of Japan joining the ECB in implementing negative rates. Yellen noted that inflation rates have remained very low due to the strong US dollar and weak oil prices. Given the current economic situation, many experts expect no more than two rate hikes this year, perhaps in June and December. At the same time, any improvement in key US numbers will heat up speculation about a possible March hike.
Monday (Feb. 15)
- 19:30 RBA Monetary Policy Meeting Minutes
Tuesday (Feb. 16)
- 8:30 US Empire State Manufacturing Index. Estimate -10.5 points. Actual -16.6 points
- 10:00 US NAHB Housing Market Index. Estimate 60 points
- 16:00 US TIC Long-Term Purchases
- 19:30 US FOMC Member Eric Rosengren Speaks
Upcoming Key Events
Wednesday (Feb. 17)
- 8:30 US Building Permits. Estimate 1.21M
- 8:30 US PPI. Estimate -0.2%
- 14:00 FOMC Meeting Minutes
*Key releases are highlighted in bold
*All release times are EST
AUD/USD for Tuesday, February 16, 2016
AUD/USD February 16 at 10:15 EST
AUD/USD Open: 0.7146 Low: 0.7143 High: 0.7182 Close: 0.7143
- The pair has shown slight movement over the course of the day
- 0.7100 is providing weak support
- There is resistance at 0.7213
- Current range: 0.7100 to 0.7213
Further levels in both directions:
- Below: 0.7100, 0.7012, 0.6931 and 0.6848
- Above: 0.7213, 0.7385 and 0.7440
OANDA’s Open Positions Ratio
AUD/USD ratio is showing little movement, consistent with the lack of movement from AUD/USD. The ratio remains close to an even split between long and short positions. This indicates a lack of trader bias as to what direction the pair will head to next.