AUD/USD – Aussie drops below 71, investors braced for soft Australian CPI

AUD/USD has posted considerable losses in the Tuesday session. In North American trade, the pair is trading at 0.7095, down 0.56% on the day. The Aussie has slipped close to 1.0 percent this week, and is currently trading at a 3-week low.

On the release front, there were no major events in the U.S. New home sales jumped to 692 thousand, marking a 12-month high. However, Richmond Manufacturing Index fell to 3, down sharply from 10 points a month earlier. In Australia, the CB Leading Index improved to 0.5% in February, after a gain of 0.3% in the January release. CPI is expected to slow to 0.2% in Q1, while Trimmed Mean CPI is projected to remain unchanged at 0.4%.

The RBA has held the course with monetary policy, but that hasn’t removed investor jitters. Earlier this month, rate-setters maintained the benchmark rate at 1.50%, where its has been pegged for 32 months. However, dovish language in the rate statement sent the Aussie lower, as investors remain concerned about the economic outlook. China, which is Australia’s largest trading partner, is mired in a slowdown, and that could spell major trouble for the Australian economy. The markets have priced in a rate cut when the RBA finally makes a move, which could occur later in the year.

Crude has jumped to a 5-month high after the Trump administration announced that it would terminate sanction waivers given to some importers of Iranian oil, as of May 1. This move is intended to further tighten sanctions against Iran and cripple Iranian oil exports. The move has been bitterly criticized by Iran, which has upped the ante by threatening to close the Strait of Hormuz, a critical gateway for seaborne oil shipments. The rising geopolitical temperature could further boost oil prices, which are up 50% since December. Higher oil prices could unnerve investors and hurt risk currencies like the Australian dollar.

AUD/USD Fundamentals

Tuesday (April 23)

  • 9:00 US HPI. Estimate 0.6%. Actual 0.3%
  • 9:59 US Richmond Manufacturing Index. Estimate 10. Actual 3
  • 10:00 US New Home Sales. Estimate 647K. Actual 692K
  • 10:30 Australian CB Leading Index. Actual 0.5%
  • 21:30 Australian CPI. Estimate 0.2%
  • 21:30 Australian Trimmed Mean CPI. Estimate 0.4%

*All release times are EDT

* Key events are in bold

AUD/USD for Tuesday, April 23, 2019

Open: 0.7135 High: 0.7140 Low: 0.7081 Close: 0.7095

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.6825 0.6970 0.7085 0.7190 0.7240 0.7315
  • AUD/US posted small losses in the Asian and European sessions. The pair continues to lose ground in North American trade
  • 0.7085 is under pressure in support after losses by AUD/USD on Tuesday
  • There is resistance at 0.7190
  • Current range: 0.7085 to 0.7190

Further levels in both directions:

  • Below: 0.7085, 06970, and 0.6825
  • Above: 0.7315, 0.7240, and 0.7190

OANDA’s Open Positions Ratio

AUD/USD ratio is showing short positions with a small majority (53%), indicative of trader bias towards AUD/USD continuing to move to lower ground.

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.

Kenny Fisher

Kenny Fisher

Currency Analyst at Market Pulse
Kenny Fisher joined OANDA in 2012 as a Currency Analyst. Kenny writes a daily column about current economic and political developments affecting the major currency pairs, with a focus on fundamental analysis. Kenny began his career in forex at Bendix Foreign Exchange in Toronto, where he worked as a Corporate Account Manager for over seven years.