AUD/USD – Aussie Steady, Markets Eye RBA Minutes

The Australian dollar has posted slight gains on Monday, as AUD/USD trades at 0.7140 in the North American session. In economic news, Australian New Motor Vehicle Sales rebounded with a gain of 0.5%. There was more good news, as China posted a trade surplus of $406 billion, well above the forecast. Early on Tuesday, the RBA will release the minutes of its recent policy meeting. US markets are closed for a holiday, so there are no US releases on the schedule.

Australia released a positive New Motor Vehicles Sales report in January. The indicator, an important gauge of consumer confidence, gained 0.5%, compared to a reading of -0.5% a month earlier. There has been plenty of negative news out of China in the early part of 2016, but the Chinese trade surplus sparkled in January, jumping to $406 billion, well above the estimate of $389 billion. An expanding Chinese economy is good news for Australia, as the Asian giant is Australia’s largest trading partner. Market attention now shifts to the RBA minutes. At the last policy meeting, the RBA noted that the Australian economy had improved modestly, but left open room for further rate cuts. Analysts will be looking for further details about the central bank’s bias towards easing from the minutes. We could see some volatility after the release of the minutes, so traders should treat this event as a market-mover.

The markets were all ears last week, as Federal Reserve Chair Janet Yellen testified before both houses of Congress. Yellen’s message was markedly different than the upbeat statement from the Fed back in the heady days of December. At that time, the Fed raised rates by 0.25%, the first upward move in a decade, and hinted at a series of rate hikes in 2016. Fast forward to February, and Yellen discussed negative interest rates. The Fed has rejected making such a move in the past, and this is unlikely to change. Still, it is a relevant scenario, with the Bank of Japan joining the ECB in implementing negative rates. Yellen noted that inflation rates have remained very low due to the strong US dollar and weak oil prices. Given the current economic situation, many experts expect no more than two rate hikes this year, perhaps in June and December. At the same time, any improvement in key US numbers will heat up speculation about a possible March hike.

AUD/USD Fundamentals

Sunday (Feb. 13)

19:30 Australian New Motor Motor Vehicle Sales. Actual 0.5%

Monday (Feb. 14)

19:30 RBA Monetary Policy Meetings

*Key releases are highlighted in bold

*All release times are EST

AUD/USD for Monday, February 15, 2016

AUD/USD February 15 at 11:00 EST

AUD/USD  Open: 0.7116 Low: 0.7110  High: 0.7171 Close: 0.7142

AUD/USD Technical

• AUD/USD posted slight gains in the Asian session. The pair has shown marginal movement in the European and North American sessions.
• 0.7100 is providing weak support
• There is resistance at 0.7213
• Current range: 0.7100 to 0.7213

Further levels in both directions:

• Below: 0.7100, 0.7012, 0.6931 and 0.6848
• Above: 0.7213, 0.7385 and 0.7440

OANDA’s Open Positions Ratio

AUD/USD ratio is showing an even split between long and short positions. This indicates a lack of trader bias as to what direction the pair will head to 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.