AUD/USD – Aussie Quiet Ahead of Yellen Speech

The Australian dollar is steady on Tuesday, as AUD/USD trades at 0.7530 in the European session. There are no Australian releases on the schedule. In the US, CB Consumer Confidence is expected to climb to 93.9 points. As well, Federal Reserve Janet Yellen will deliver remarks at the Economic Club in New York City.

The US consumer has not been in a spending move, as underscored by consumer indicators on Monday. Core PCE Price Index and Personal Spending both softened in February, posting weak gains of 0.1 percent. CB Consumer Confidence, a key indicator, follows on Tuesday, with the markets expecting the indicator to improve in February. Analysts will be keeping a close eye on this event, as consumer confidence is closely linked to consumer spending.

US economic growth in the fourth quarter was respectable, but there are signs that we could see softer numbers for the first quarter of 2016. The Atlanta Fed downgraded its forecast for Q1 from 1.4 percent to 0.6 percent. The original forecast, released just last week, was lowered in response to a downgraded forecast of personal income and outlays by the US Bureau of Economic Analysis. US Final GDP for the fourth quarter rose 1.4 percent, above the estimate of 1.0 percent, but lower than the 2.0 percent gain in the third quarter. If US economic activity did in fact weaken in Q1, we could see the US dollar lose ground.

After a dovish policy statement from the Fed earlier this month, an interest rate hike did not seem likely before June. However, a flurry of hawkish statements from Federal Reserve members last week caught the markets by surprise and resulted in broad gains for the dollar, as the Aussie dropped close to 100 points. With some Fed members calling for a rate hike as early as April, the markets will be looking for some guidance from Fed chair Janet Yellen, who will make a speech in New York later on Tuesday. If Yellen does not rule out an April move, speculation of an imminent rate hike will increase, and the US dollar could respond with broad gains.

AUD/USD Fundamentals

Tuesday (March 29)

• 9:00 US S&P/CS Composite-20 HPI. Estimate 5.7%
• 10:00 US CB Consumer Confidence. Estimate 93.9
• 12:20 US Federal Reserve Chair Janet Yellen Speaks

Upcoming Key Events

Wednesday (March 30)

• 12:15 ADP Nonfarm Employment Change. Estimate 194K

*Key releases are highlighted in bold

*All release times are DST

AUD/USD for Tuesday, March 29, 2016

AUD/USD March 29 at 7:35 DST

AUD/USD  Open: 0.7553 Low: 0.7515 High: 0.7570 Close: 0.7530

AUD/USD Technical

• AUD/USD posted small gains in the Asian session but has reversed directions in European trade
• 0.7472 is providing support
• 0.7560 is a weak resistance line. It was tested earlier in the day
• Current range: 0.7472 to 0.7560

Further levels in both directions:

• Below: 0.7472, 0.7385 and 0.7213
• Above: 0.7560, 0.7678, 0.7796 and 0.7913

OANDA’s Open Positions Ratio

The AUD/USD ratio is unchanged this week. Short positions have a majority (54%), indicative of trader bias towards AUD/USD reversing directions and losing ground.

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.