AUD/USD – Aussie Pushes Above 0.72 Line

The Australian dollar is almost unchanged on Friday, as AUD/USD trades just above the 0.72 line at the start of the North American session. The pair posted considerable gains on Thursday. After a rocky October, the Australian dollar has rebounded, gaining close to 200 points in the past two weeks. It’s a quiet end to the week, with no economic releases out of Australia or the US. FOMC Member William Dudley, a proponent of a rate hike in December, will deliver remarks at an event in New York.

The Federal Reserve minutes of the October 28 policy meeting were highly anticipated, as the guessing game about a Fed rate continues. However, there were no surprises from the Fed, and the markets didn’t show much movement after the release. At the meeting, a majority of Fed members said they were in favor of a rate hike in December. The minutes also noted that employment numbers had weakened in recent months, but analysts pointed out that this was prior to the stellar Nonfarm Payrolls report in October. On the inflation front, the minutes stated that Fed policymakers were confident that inflation would remain at stable levels.

Although the Fed minutes did not confirm a December rate hike, most analysts concur that the long-awaited move will indeed occur next month. Market expectations have risen to 66% that the Fed will make a move next month. Chris Rupkey, chief financial economist at Bank of Tokyo Mitsubishi, Japan’s largest bank, said he would be “astounded” if the Fed did not raise rates at their next meeting on December 16, especially in light of the strong Nonfarm Payrolls report in October. One major weak spot in the economy is that of weak inflation levels, and the Fed has repeatedly stated that inflation is a prime factor in its decision-making process. Last week’s PPI was awful, posting a second straight decline. On Tuesday, CPI and Core CPI posted small gains of 0.2%, matching the forecast. Are these lukewarm readings enough to convince a majority of Fed members to vote in favor of a hike? Another important factor which must be remembered is that the markets now seem prepared for a small hike of 0.25% or 0.50%, and there is a growing view that a modest move would not cause unwanted turbulence on the global markets.

The US economy continues to show improvement in most areas, but the manufacturing sector continues to lag behind. There was some positive news on Thursday, as the Philly Fed Manufacturing Index posted a small gain of 1.9 points, beating the estimate of 0.1 points. It marked the indicator’s first gain after two consecutive declines. Earlier this week, the Empire State Manufacturing Index posted its fourth straight decline, underlining worsening conditions in the manufacturing sector. In November, the indicator came in at -10.7 points, weaker than the forecast of -5.3 points.

AUD/USD Fundamentals

Friday (Nov. 20)

• 16:15 FOMC Member Dennis William Dudley Speaks

*Key releases are highlighted in bold

*All release times are GMT

AUD/USD for Friday, November 20, 2015

AUD/USD November 20 at 14:25 GMT

AUD/USD 0.7204 H: 0.7220 L: 0.7183

AUD/USD Technical

• AUD/USD was flat in the Asian session and has posted small gains in European session.
• The round number of 0.71 is an immediate support level.
• 0.7213 is a weak resistance line.
• Current range: 0.7100 to 0.7213

Further levels in both directions:

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

OANDA’s Open Positions Ratio

AUD/USD ratio is showing little movement, with long and short positions evenly split. This is indicative of a lack of trader bias as to what direction the pair will take next.

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.