AUD/USD – Aussie Stabilizes After Sharp Losses

AUD/USD has steadied on Thursday, as the pair trades just above the 0.86 line. The Aussie slumped on Thursday, losing 100 points. It was a busy day in the US, with a host of key releases. CPI and Core CPI met expectations, as CPI came in at 0.0% and Core CPI posted a gain of 0.2%. Unemployment Claims were almost unchanged, with a reading of 291 thousand. Philly Fed Manufacturing Index soared to 40.8 points and US Existing Home Sales improved to 5.26 million. There are no Australian releases on Thursday.

US consumer inflation remains weak, but met expectations in November. CPI posted a flat 0.0%, edging above the estimate of -0.1%. Core CPI posted a gain of 0.2%, matching the forecast. Unemployment Claims came in at 291 thousand higher than the estimate of 286 thousand. There was good news as well, as the Philly Fed Manufacturing Index soared to 40.8 points, its highest since March 2011. The estimate stood at 18.9 points. As well, Existing Home Sales improved to 5.26 million, a one year high. The markets had expected a reading of 5.16 million.

The Federal Reserve released its minutes on Wednesday and there were no clues about the timing of a rate hike. The markets are expecting rates to rise in the second half of 2015, but this will of course depend on economic conditions. With inflation below the Federal Reserve target of 2%, there is less pressure on the Fed to raise rates. The minutes also noted that weak economic outlooks in Europe and Japan are unlikely to have a negative impact on the US economy.

On Tuesday, the Australian dollar took a tumble after the release of the RBA minutes, in which the central bank reiterated that interest rates would remain at record low levels. The RBA has maintained rates at 2.50% since July 2013 and has been reluctant to tinker with this level. The RBA took another swipe at the Aussie, saying the currency remains overvalued. Although the Australian dollar is trading well below the 0.90 level, the RBA would like to see the currency at lower levels in order to facilitate economic growth and boost the ailing export sector.

AUD/USD for Thursday, November 20, 2014

AUD/USD November 20 at 15:00 GMT

AUD/USD 0.8620 H: 0.8625 L: 0.8567

AUD/USD Technical

• AUD/USD dipped to a low of 0.8557 in the Asian session, putting pressure on support at 0.8550. The pair rebounded in European trade.
• 0.8550 is the next support level.
• 0.8668 is a weak resistance line. 0.8763 is stronger.
• Current range: 0.8550 to 0.8668.

Further levels in both directions:

• Below: 0.8550, 0.8456, 0.8315 and 0.8240
• Above: 0.8668, 0.8763, 0.8820, 0.8953 and 0.9020

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in long positions on Thursday, continuing the trend we have seen throughout the week. This is not consistent with what we’re seeing from the pair, as the Australian dollar is almost unchanged on the day. The ratio has a majority of long positions, indicative of trader bias towards AUD/USD gaining ground.

AUD/USD Fundamentals

• 12:45 US FOMC Member Daniel Tarullo Speaks.
• 13:30 US CPI. Estimate -0.1%. Actual 0.0%.
• 13:30 US Core CPI. Estimate 0.2%. Actual 0.2%.
• 13:30 US Unemployment Claims. Estimate 286K. Actual 291K.
• 14:45 US Flash Manufacturing PMI. Estimate 56.2 points. Actual 54.7 points.
• US Philly Fed Manufacturing Index. Estimate 18.9 points. Actual 40.8 points.
• 15:00 US Existing Home Sales. Estimate 5.16M. Actual 5.26M.
• 15:00 US CB Leading Index. Estimate 0.6%. Actual 0.9%.
• 15:30 US Natural Gas Storage. Estimate -12B.
• 18:30 US FOMC Member Loretta Mester Speaks.

*Key releases are highlighted in bold

*All release times are GMT

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.