AUD/USD – Rangebound As Markets Eye Key US Releases

The Australian dollar continues to show little movement on Tuesday, as AUD/USD trades in the low-0.89 range in the European session. In economic news, there are no Australian releases this week. Over in the US, there are two major events on the schedule – Core Durable Goods Orders and New Home Sales.

US releases ended on a positive note last week, as GDP climbed 4.1% in Q3, compared to 2.6% in the previous quarter. This was the indicator’s sharpest gain since Q1 of 2010. The estimate stood at 3.6%. Meanwhile, Unemployment Claims jumped to 379 thousand claims last week, up from 368 thousand the week before. This was well above the estimate of 336 thousand. The previous release’s weak numbers were attributed to the holiday season, but two consecutive poor releases will certainly not comfort the markets. There was more bad news to follow, as Existing Home Sales and the Philly Fed Manufacturing Index fell short of their estimates.

The markets are still buzzing after last week’s announcement by the Federal Reserve that it would begin tapering its QE program by $10 billion a month, commencing in January. This will reduce the Fed’s asset purchases to $75 billion every month, comprised of $40 billion in Treasuries and $35 billion in mortgage bonds. The announcement came as somewhat of a surprise, as most analysts had expected the Fed to hold off on any QE reductions until early next year.

In its dramatic tapering announcement, the Federal Reserve was careful to separate tapering from rate hike expectations. Fed chairman Bernard Bernanke stated that interest rates are likely to remain low even after the unemployment rate drops below 6.5%. Previously, the Fed had stated that it would start to consider rate increases when unemployment fell below this level. Bottom line? With the unemployment rate at 7.0%, it could be a while before we see higher interest rates in the US.

AUD/USD for Tuesday, December 24, 2013

AUD/USD December 24 at 13:30 GMT

AUD/USD 0.8922 H: 0.8934 L: 0.8906

AUD/USD Technical

• AUD/USD is showing little movement in Tuesday trading. The pair touched a low of 0.8905 late in the Asian session.
• The round number of 0.9000 continues to provide resistance. This is followed by a resistance line at 0.9119.
• On the downside, 0.8893 is providing support. This line could be tested if the Aussie loses ground. The next support level is 0.8735, which has remained intact since July 2010.
• Current range: 0.8893 to 0.9000

Further levels in both directions:

• Below: 0.8893, 0.8735, 0.8658, 0.8505 and 0.8411
• Above: 0.9000, 0.9119, 0.9229 and 0.9305

OANDA’s Open Positions Ratio

AUD/USD ratio is unchanged in Tuesday trading. This is consistent with what we are seeing from the pair, which is not showing much movement. The ratio is made up of a substantial majority of long positions, reflecting a trader bias towards the Australian dollar moving higher against the US currency.

The Australian dollar is trading quietly in the low-0.89 range. We could see AUD/USD show some life in the North American session, as the US releases key housing and manufacturing numbers later on Tuesday.

AUD/USD Fundamentals

• 13:30 US Core Durable Goods Orders. Estimate 0.9%.
• 13:30 US Durable Goods Orders. Estimate 0.9%.
• 14:00 US HPI. Estimate 0.5%.
• 15:00 US New Home Sales. Estimate 449K.
• 15:00 US Richmond Manufacturing Index. Estimate 15 points.

*Key releases are highlighted in bold

*All release times are GMT

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