AUD/USD - Steady As Markets Eye Fed Announcement

Includes: FXA, UDN, UUP
by: Dean Popplewell

By Kenny Fisher

AUD/USD is not showing much activity in Wednesday trading, as the pair remains close to the 0.90 line. Today's highlight is the Federal Reserve's policy statement, with another trim to QE widely expected. There are on events out of Australia on Wednesday.

Will we see another QE trim on Wednesday? The US Federal Reserve concludes its policy meeting on Wednesday, its first meeting under the tutelage of Janet Yellen. Recent US numbers haven't dazzled, but they should be strong enough for the Federal Reserve to go ahead with another taper of QE. This would be the third trim of the Fed's asset-buying scheme, and would reduce QE to $55 billion per month. These tapers are dollar-positive and mark a vote of confidence in the US economy by the Fed, so a taper could give the US a push upwards.

The RBA published its minutes of its most recent policy meeting on Tuesday, and there was nothing dramatic in the minutes. The central bank has kept interest rates at 2.50% since July, and the minutes indicated that this level will be maintained. The RBA said that the record-low rate was boosting growth. As for currency levels, the RBA noted that the drop in the Aussie had helped the economy achieve balanced growth, but added that the "exchange rate remained high by historical standards".

Events are moving fast in the Ukrainian crisis. Voters in Crimea voted overwhelmingly to join Russia in a referendum on Sunday. The next day, Russian Prime Minister Putin formally recognized Crimea as an independent state, paving the way for annexation. The EU and US have slapped targeted sanctions against high-ranking Russian officials, and Western leaders plan to meet during the week to discuss a united strategy to respond to the crisis. So far, the currency markets have generally not reacted to the events in Ukraine, but that could change if the crisis deteriorates.

AUD/USD for Wednesday, March 19, 2014

Forex Rate Graph 21/1/13

AUD/USD March 19 at 15:45 GMT

AUD/USD 0.9100 H: 0.9134 L: 0.9096

AUD/USD Technical

S3 S2 S1 R1 R2 R3
0.8735 0.8893 0.9000 0.9119 0.9229 0.9361
  • AUD/USD continues to trade close to the 0.91 line.
  • 0.9000 continues to provide strong support. This is followed by support at 0.8893.
  • 0.9119 is the first line of resistance. This is a weak line which was breached earlier and could see further action during the day. There is stronger resistance at 0.9229.
  • Current range: 0.9000 to 0.9119

Further levels in both directions:

  • Below: 0.9000, 0.8893, 0.8735, 0.8658 and 0.8565
  • Above: 0.9119, 0.9229, 0.9361 and 0.9466

OANDA's Open Positions Ratio

AUD/USD ratio has reversed directions in Wednesday, pointing to gains in short positions. This is consistent with what we are seeing from the pair, as the Aussie has posted slight losses against the US dollar. AUD/USD ratio is made up of a majority of long positions, reflecting a trader bias towards the Australian dollar moving higher against the US currency.

The Australian dollar is trading close to the 0.91 line. AUD/USD listless in the North American session.

AUD/USD Fundamentals

  • 12:30 US Current Account. Exp. -88B. Actual -81B.
  • 14:30 US Crude Oil Inventories. Exp. 2.4M. Actual 5.9M.
  • 18:00 US FOMC Economic Projections.
  • 18:00 US FOMC Statement.
  • 18:00 US Federal Funds Rate.
  • 18:30 US FOMC Press Conference.

*Key releases are highlighted in bold

*All release times are GMT

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.