AUD/USD – Aussie Subdued, Markets Eye RBA Minutes

The Australian dollar has posted slight gains on Monday, as AUD/USD is trading at the 0.73 line in the North American session. On the release front, the RBA will release the minutes of its policy meeting earlier this month. As well, Australia will release New Motor Vehicles Sales, an important consumer indicator. In the US, it’s a quiet start to the week, highlighted by the Empire State Manufacturing Index. The index is expected to climb 7.2 points. On Tuesday, the US releases CPI, the primary gauge of consumer inflation.

All eyes are on the RBA, which will release its minutes later on Monday. The markets will be combing through the report, looking for clues as to the timing of another rate cut. The RBA surprised the markets with a rate cut last week, lowering rates from 2.00% to 1.75%. With a national election scheduled for July 2, the RBA is unlikely to make any monetary moves until August. If inflation levels don’t improve soon, the likelihood will increase that the RBA will step in with another rate cut in the summer. The Australian dollar has looked dreadful in May, losing over 300 points. Much of that drop can be attributed to the RBA rate cut and hints from the RBA that another cut could occur this summer.

US releases wrapped up the week on a positive note, highlighted by solid retail sales and consumer confidence reports. Core Retail Sales posted a strong gain of 0.8%, above the estimate of 0.6%. Retail Sales surged 1.3%, its strongest gain in over six years. The gain was all the more impressive as the markets had anticipated a decline of 0.3%. Consumer confidence also looked sharp, as UoM Consumer Sentiment jumped to 95.8 points, compared to the estimate of 89.9 points. This was the indicator’s best showing since April 2015. On the inflation front, PPI posted a small gain of 0.2%, shy of the forecast of 0.3%. We’ll get a look at CPI reports on Tuesday. A rate hike remains on the table for June, but the Fed is unlikely to make a move if inflation numbers fail to improve. On Wednesday, the Fed will release the minutes of its April policy meeting. The markets will be combing through the report, looking for hints about what the Fed has planned for this summer.

AUD/USD Fundamentals

Monday (May 16)

• 8:30 US Empire State Manufacturing Index. Estimate 7.2
• 10:00 US NAHB Housing Market Index. Estimate 59
• 16:00 US TIC Long-Term Purchases. Estimate 36.5B
• 21:30 RBA Monetary Policy Meeting Minutes
• 21:30 Australian New Motor Vehicles Sales

Upcoming Key Events

Tuesday (May 17)

• 8:30 US Building Permits. Estimate 1.13M
• 8:30 US CPI. Estimate 0.4%
• 8:30 US Core CPI. Estimate 0.2%

*Key releases are highlighted in bold

*All release times are EDT

AUD/USD for Monday, May 16, 2016

AUD/USD May 16 at 8:40 EDT

Open: 0.7272 Low: 0.7266 High: 0.7305 Close: 0.7300

AUD/USD Technical

• AUD/USD has posted limited movement in the Asian and European sessions
• 0.7251 is providing support
• 0.7339 is a weak resistance line
• Current range: 0.7251 to 0.7339

Further levels in both directions:

• Below: 0.7251, 0.7160 and 0.7049
• Above: 0.7339, 0.7472, 0.7560 and 0.7678

OANDA’s Open Positions Ratio

AUD/USD ratio has shown little movement  on Monday. Long positions retain a strong majority (57%), indicative of trader bias towards AUD/USD continuing to move higher.

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.