The Australian dollar has posted considerable losses on Wednesday, as AUD/USD trades at the 0.7630. On the release front, Australian Wage Price Index posted a gain of 0.5%, matching the forecast. Later in the day, Australia releases Employment Change and the Unemployment Rate. In the US, today’s highlight is the FOMC minutes from the Fed’s July policy meeting. On Thursday, the US will release two key events – Philly Fed Manufacturing Index and Unemployment Claims.
The RBA minutes proved to be a non-event, garnering little reaction from the Australian dollar. The bank did not provide an outlook for future rate moves but did note that there is “considerable” uncertainty in inflation forecasts. The RBA has already gone on record saying that it does not expect inflation to climb near its 2% target before 2018, so it’s a safe bet that any rate hikes are a long way off. Rather, the question facing the markets is how low inflation has to fall before the RBA lowers rates again. The bank cut rates by a quarter point earlier in the month to a record low of 1.50%. The move was fully priced in by the markets, and the Aussie continued to gain ground after the announcement. Some analysts are predicting that rates could fall to as low as 1.0% by mid-2017. Inflation indicators will be under the market microscope, as any soft numbers will likely raise expectations of a rate cut.
US inflation numbers remain very weak, as underscored by July’s consumer inflation reports. CPI posted a weak reading of 0.0%, its worst showing in five months. Core CPI dropped to 0.1%, shy of the estimate of 0.2%. Wednesday’s highlight is the Federal Reserve minutes, which will provide details of the Fed’s July policy meeting. However, the minutes could prove to be a non-event, since there have been a host of key releases since the July meeting. Problem is, the data is pointing in all directions, making it a tricky task to try and figure out when the Fed might raise interest rates. After a soft GDP report in late July, nonfarm payrolls was stellar. However, this was followed by weak retail sales and CPI numbers. Bottom line? A September hike is virtually off the table, while the odds of a December hike are pegged at 50/50. However, Fed policymakers will be hesitant to raise rates if key indicators, particularly inflation levels, remain at such levels.
Tuesday (August 16)
- 20:30 Australian MI Leading Index. Estimate 0.1%
- 21:30 Australian Wage Price Index. Estimate 0.5%. Actual 0.5%
Wednesday (August 17)
- 10:30 US Crude Oil Inventories. Estimate 0.3M
- 13:00 FOMC Member James Bullard Speaks
- 14:00 US FOMC Meeting Minutes
- 21:30 Australian Employment Change. Estimate 10.2K
- 21:30 Australian Unemployment Rate. Estimate 5.8%
Thursday (August 18)
- 8:30 US Philly Fed Manufacturing Index. Estimate 1.4
- 8:30 US Unemployment Claims. Estimate 269K
*Key releases are highlighted in bold
*All release times are EDT
AUD/USD for Wednesday, August 17, 2016
AUD/USD August 17 at 6:45 EDT
Open: 0.7695 High: 0.7705 Low: 0.7016 Close: 0.7628
- AUD/USD posted slight losses in the Asian session. The downward trend has continued with considerable losses in European trade
- There is resistance at 0.7701
- 0.7560 is providing support
- Current range: 0.7560 to 0.7701
Further levels in both directions:
- Below: 0.7560, 0.7440 and 0.7339
- Above: 0.7701, 0.7835, 0.7938 and 0.8045
OANDA’s Open Positions Ratio
AUD/USD ratio is almost unchanged on Wednesday. Currently, short positions have a majority (54%). This is indicative of trader bias towards the pair continuing to move lower.