AUD/USD – Limited Movement Ahead of US Durables, Consumer Confidence

The Australian dollar is steady on Wednesday, as AUD/USD trades at 0.7220 in the European session. In economic news, today’s key event is Core Durable Goods Orders. The markets are expecting a weak gain of 0.1% in the November report. We’ll also get a look at UoM Consumer Sentiment, with the indicator expected to rise to 92.1 points. Later in the day, Australia will release the CB Leading Index.

The US economy continues to improve, as GDP expanded by 2.0%, above the forecast of 1.9%. The main catalyst for the solid reading was consumer spending, as confidence about the economy remains high, as the US consumer has shown greater willingness to open the purse strings. Falling gas prices have helped, as consumers have more disposable income available. There was more good news from the manufacturing sector, which has been one area of weakness in the economy, as the Richmond Manufacturing Index jumped to a 5-month high, climbing to 6 points. The estimate stood at -1 point. However, Existing Home Sales dropped sharply, falling to 4.76 million, its worst showing since April 2014.

After months of standing on the sidelines, the Federal Reserve finally pressed the rate trigger, raising interest rates by 0.25 percent, the first rate hike since June 2006. The Fed dropped a broad hint in its October policy meeting about a rate hike before the end of 2015, and predictably, investors and traders were busy trying to guess whether the Fed would indeed press the rate trigger. To the credit of Fed chief Janet Yellen and her colleagues, the Fed put into place a carefully-crafted strategy, sending a steady of stream of signals that it was intending to tighten monetary policy, if economic conditions remained positive. This gave the markets ample time to price in a rate hike, and currency market volatility was not excessive after the US rate hike, the first in almost 10 years. Although a hike of 0.25 percent is expected to have limited economic impact, the Fed move has given the US economy a critical vote of confidence, and this will be duly noted by the global markets. As well, this move is expected to be the first in a series of incremental rate hikes over the course of 2016, and higher interest rates means that the US dollar will become even more attractive to investors, at the expense of other currencies, which could spell bad news for the Australian dollar.

AUD/USD Fundamentals

Wednesday (Dec. 23)

• 00:50 US Personal Spending. Estimate 0.3%. Actual 0.3%
• 13:30 US Core Durable Goods Orders. Estimate 0.1%
• 13:30 US Core PCE Price Index. Estimate 0.1%
• 13:30 US Durable Goods Orders. Estimate -0.6%
• 13:30 US Personal Income. Estimate 0.2%
• 15:00 US New Home Sales. Estimate 507K
• 15:00 US Revised UoM Consumer Sentiment. Estimate 92.1 points
• 15:00 US Revised UoM Inflation Expectations
• 15:30 US Crude Oil Inventories. Estimate 1.4M
• 23:00 Australian CB Leading Index

Thursday (Dec. 24)

Upcoming Key Events

13:30 US Unemployment Claims. Estimate 270K

*Key releases are highlighted in bold

*All release times are GMT

AUD/USD for Wednesday, December 23, 2015

AUD/USD December 23 at 12:45 GMT

AUD/USD 0.7230 H: 07248 L: 0.7219

AUD/USD Technical

• AUD/USD has showed limited movement in the Asian and European sessions
• 0.7213 is a weak support level
• 0.7349 is a strong resistance line
• Current range: 0.7213 to 0.7349

Further levels in both directions:

• Below: 0.7213, 0.7100, 0.7063 and 0.6931
• Above: 0.7349, 0.7440 and 0.7526

OANDA’s Open Positions Ratio

AUD/USD ratio is unchanged, reflective of the lack of movement from the pair. The pair remains close to a split between long and short positions, indicative of a lack of trader bias as to which direction the pair will head 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.