AUD/USD – Little Movement Ahead of RBA Minutes, US Inflation

The Australian dollar is steady on Monday, as AUD/USD trades just under the 0.71 line in the North American session. It’s a quiet start to the week, with no major events in Australia or the US. Australian New Motor Vehicle Sales disappointed, with a decline of 3.6%. In the US, the Empire State Manufacturing Index missed expectations, with a weak reading of -10.7 points. On Tuesday, we could see some volatility, as the RBA will release the minutes of its most recent policy meeting, and the US publishes key CPI numbers.

The week started out with rather unimpressive numbers from Australia and the US. Australian New Motor Vehicle Sales, an important gauge of consumer spending, posted a sharp decline of 3.6% in October. It was the third decline in the past four readings, pointing to weakness in consumer spending. This could spell bad news for the economy, as consumer spending is a key driver of economic growth. Meanwhile, the Empire State Manufacturing Index came in at -10.7 points in November, its fourth consecutive decline. This points to continuing weakness in the US manufacturing sector, which has struggled despite a stronger US economy.

Australian job numbers were unexpectedly strong on Thursday. Employment Change surged with a reading of 58.6 thousand, crushing the estimate of 14.8 thousand. This was the strongest gain recorded since August 2014. The unemployment rate dropped to 5.9%, marking the first time it has been below the 6.0% level since May 2014. The markets had expected the indicator to remain at 6.2%. AUD/USD responded with strong gains on Thursday, but has since reversed directions and given up much of these gains.

US numbers on Friday were a mix. Retail Sales and PPI both fell short of expectations. Retail Sales came in at 0.1%, while Core Retail Sales was only marginally better, with a small gain of 0.2%. PPI came in at -0.4%, as the manufacturing inflation indicator posted a second straight decline. There was better news on the consumer front, as U0M Consumer Sentiment improved to 93.1 points, beating the estimate of 91.3 points. On Tuesday, we’ll get a look at US CPI and Core CPI, the primary gauges of consumer inflation. These indicators could play a crucial factor of whether the Fed makes a move and raises rates next month. Strong CPI readings could win over Fed policymakers who are concerned about whether the economy is strong enough to withstand a rate hike.

AUD/USD Fundamentals

Monday (Nov. 16)

• 00:30 Australian New Motor Vehicle Sales. Actual -3.6%
• 13:30 US Empire State Manufacturing Index. Estimate -5.3 points. Actual -10.7 points
• 21:30 RBA Assistant Governor Christopher Kent Speaks

Upcoming Key Events

Tuesday (Nov. 17)

• 00:00 RBA Monetary Policy Meeting Minutes
• 13:30 US CPI. Estimate 0.2%
• 13:30 US Core CPI. Estimate 0.2%

*Key releases are highlighted in bold

*All release times are GMT

AUD/USD for Monday, November 16, 2015

AUD/USD November 16 at 16:40 GMT

AUD/USD 0.7085 H: 0.7132 L: 0.7082

AUD/USD Technical

• AUD/USD showed limited movement in the Asian session. The pair has posted modest losses in the European session and is steady in North American trade.
• The round number of 0.71 has switched to a resistance role after losses by the pair on Monday. This is a weak line which could see further action in the North American session.
• 0.7063 is protecting the symbolic 0.70 level. It is a weak line.
• Current range: 0.7063 to 0.7100

Further levels in both directions:

• Below: 0.7063, 0.7000 and 0.6931
• Above: 0.7100, 0.7213, 0.7440 and 0.7526

OANDA’s Open Positions Ratio

AUD/USD ratio on Monday is showing long positions with a slight majority (53%), which is indicative of a slight trader bias in favor of the Australian dollar continuing to move to higher levels.

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.