Aussie Loses Ground On Stevens Comments
MarketPulse | Aug 20, 2014 11:02AM ET
AUD/USD has edged higher on Wednesday, as the pair trades close to the 0.93 line early in the North American session. The pair dipped on Tuesday, following parliamentary testimony from RBA head Glenn Stevens. On the release front, Australian MI Leading Index, a minor event, posted a decline of -0.1%. In the US, today's highlight is the Federal Reserve's policy minutes.
RBA Governor Glenn Stevens testified before parliament on Tuesday, and managed to talk down the Australian dollar, which dipped below the 0.93 line. Stevens said that in the present economic environment, the economic needed an injection of confidence rather than lower interest rates. Stevens also warned that the risk of the Australian dollar dropping was “underestimated". His comments follow the minutes from its recent policy meeting, and the tone was somewhat pessimistic. Policymakers stated there was a "significant degree of uncertainty" in the economic outlook, and therefore a rate increase is unlikely. The RBA cut its growth and inflation forecasts in July, wage growth has slowed and unemployment has climbed.
All eyes are on the Federal Reserve, which will release the minutes of its last policy meeting later on Wednesday. Traders looking for clues as to when the Fed will press the trigger and raise interest rates, but Fed chair Janet Yellen might not oblige. US growth numbers have been positive, but job data could be better and inflation remains very low. The Fed's asset purchase program (QE) is scheduled to wind up in October, and a rate hike appears to be a question of timing.
The US economy has been moving in the right direction, but inflation numbers in the US remain at very low levels. On Tuesday, CPI and Core CPI, the primary gauges of consumer inflation, both posted paltry gains of 0.1%. These weak readings come on the heels of PPI, a manufacturing inflation index, which also came in at 0.1% last month. Weak inflation is one reason why the Federal Reserve is in no rush to raise interest rates, as low inflation points to slack in the economy. Meanwhile, US housing numbers were sharp on Tuesday. Building Permits improved to 1.05 million, beating the estimate of 1.00 million. Housing Starts jumped to 1.09 million, easily beating the estimate of 0.97 million.
Financial leaders and central bankers from around the world will gather in Jackson Hole, Wyoming for a conference which starts on Friday. This will be Janet Yellen's first appearance as Fed chair at the conference, and will undoubtedly be the star of the show. Yellen is expected to discuss the employment market rather than monetary policy, but the markets will be listening closely for any hints as to an interest rate hike.
Get The News You Want
- AUD/USD 0.9306 H: 0.9318 L: 0.9279
AUD/USD Technicals
| S3 | S2 | S1 | R1 | R2 | R3 |
| 0.9020 | 0.9119 | 0.9229 | 0.9361 | 0.9446 | 0.9617 |
- AUD/USD has been showing some volatility during the day. The Australian has dollar pushed across the 0.93 line and the US dollar remains under pressure.
- 0.9229 continues to provide strong support.
- 0.9361 is the next resistance line. 0.9446 is next.
- Current range: 0.9229 to 0.9361
Further levels in both directions:
- Below: 0.9229, 0.9119, 0.9020 and 0.8916
- Above: 0.9361, 0.9446, 0.9617 and 0.9757
OANDA's Open Positions Ratio
AUD/USD ratio is pointing to gains in short positions on Wednesday, reversing the direction we saw a day earlier. This is not consistent with the movement of the pair, as the Aussie has posted gains. The ratio has a majority of long positions, indicative of trader bias towards the Australian dollar breaking out and moving to higher ground.
AUD/USD Fundamentals
- 00:30 Australian MI Leading Index. Actual -0.1%.
- 14:30 US Crude Oil Inventories. Estimate -1.3M. Actual -4.5M.
- 18:00 US FOMC Meeting Minutes.
* Key releases are highlighted in bold
*All release times are GMT
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.