AUD/USD – Slight Gains on Strong Australian Data

The Australian dollar has posted modest gains on Wednesday, as AUD/USD trades in the high-0.88 range in the European session. On the release front, Australian CB Leading Index improved to 0.5%. The RBA released its Financial Stability Review, in which the central bank said it was considering steps to reduce the amount of credit available to home buyers. In the US, today’s highlight is New Home Sales. The markets are expecting the indicator to improve in the upcoming release.

There was good news from the Australian CB Leading Index, which posted a gain of 0.5% last month, its best showing since January. The index helps analysts gauge the health of the economy in various sectors, including construction and exports. As well, the RBA released its semi-annual Financial Stability Review. The report noted continuing concern over a possible real estate crash. House prices continue to move higher, thanks to the low interest rate environment. The RBA said that it is considering tighter bank lending regulations, which would make it more difficult to obtain credit. A hike in interest rates is considered unlikely, as the RBA does not want to see the Aussie rise to higher levels and hinder economic growth.

US Existing Home Sales didn’t impress in August, slipping to 5.05 million, compared to 5.15 million in the previous release. This was way off the estimate of 5.21 million. The indicator had exceeded the estimate in the past three releases, so the weak numbers disappointed the markets. The markets are hoping for better news from New Home Sales, which will be released later on Wednesday. The indicator has been struggling lately, with the past two readings missing expectations. The markets are expecting a stronger reading for August, with an estimate of 432 thousand.

The US economy continues to grapple with weak inflation levels, as underscored by August releases. CPI, the primary gauge of consumer inflation, came in at -0.2%, its first decline since October. Core CPI followed suit with a flat reading of 0.0%. This was the first time the index failed to post a gain since October 2010. The weak numbers follow disappointing manufacturing inflation data. PPI, a key event, dipped to just 0.0%, a 3-month low. Core PPI also softened in August. Low inflation levels could delay the Federal Reserve’s plan to raise interest rates, which is widely expected to take place in the first half of 2015.

AUD/USD for Wednesday, September 24, 2014

AUD/USD September 24 at 11:00 GMT

AUD/USD 0.8883 H: 0.8897 L: 0.8839

AUD/USD Technical

• AUD/USD posted gains in the Asian session. The pair is steady in European trade.
• 0.8820 is am immediate support line. 0.8763 is stronger.
• 0.8953 is the next resistance line.
• Current range: 0.8820 to 0.8953

Further levels in both directions:

• Below: 0.8820, 0.8763, 0.8668 and 0.8550
• Above: 0.8953, 0.9020, 0.9119, 0.9229 and 0.9361

OANDA’s Open Positions Ratio

AUD/USD ratio is pointing to gains in long positions on Wednesday, reversing the trend we saw a day earlier. This is consistent with the pair’s movement, as the Aussie has posted modest gains. The ratio has a majority of long positions, indicative of trader bias towards the Aussie moving to higher ground.

AUD/USD Fundamentals

• 00:00 Australian CB Leading Index. Actual 0.5%.
• 1:30 RBA Financial Stability Review.
• 14:00 US New Home Sales. Estimate 432K.
• 14:30 US Crude Oil Inventories. Estimate 0.7M.
• 16:05 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.