AUD/USD little changed amid Fed tapering speculation

Australian dollar was slightly changed against the greenback on Monday, trimming earlier gains, as investors were weighing Federal Reserve Banks timing for monetary stimulus tapering.

AUD/USD recorded a session high at 0.9043 at 4:00 GMT, after which consolidation followed at 0.9034, dipping a mere 0.01% for the day. Support was expected to be received at August 22nd low, 0.8932, while resistance was to be met at August 19th high, 0.9233.

Australian 10-year government bond yield dropped 0.04 percentage point, to 4.01% today before the crucial durable goods orders report from the United States, which may show a drop for the first time in four months in July, by 4.0%. Bloomberg reported that the rate on Australias sovereign debt due in three years decreased by one basis point to 2.78%.

Additionally, one-month volatility for the Australian do0llar appreciated 34 basis points to 12.69%, poised for the highest close since July 16th.

Meanwhile, on Friday last week the Department of Commerce said that new home sales in the United States decreased significantly to their lowest level in the past nine months in July, giving boost to concerns that rising mortgage rates may obstruct US housing market recovery. Sales of new homes tumbled by 13.4% to reach annual 394 000 units in July compared to June. The recorded drop was the strongest in three years, as sales hit their lowest point since October 2012. Experts had anticipated that new home sales will reach 490 000 units.

“There is improvement in the U.S., but it remains far from compelling in terms of sustainable long-term growth,” said Imre Speizer, a market strategist in Auckland at Westpac Banking Corp. (WBC), cited by Bloomberg. “The pace of tapering will itself be highly uncertain. Against the U.S. dollar, the Aussie and kiwi are going to be very volatile.”

Elsewhere, the Aussie was losing ground against the kiwi, as AUD/NZD cross decreased by 0.31% for the day to trade at 1.1528 at 8:37 GMT. Ultimately, Australian dollar has dropped 10% during this year, or the worst performing currency among 10 developed-nation currencies, tracked by Bloomberg Correlation-Weighted Indexes.