AUD/USD on positive territory after upbeat Australian home sales

Australian dollar traded higher against its US rival on Wednesday, as a report showed that new home sales in Australia continued to increase in the month of September.

AUD/USD touched a session high at 0.9506 at 6:40 GMT, after which consolidation followed at 0.9498, rising 0.20% for the day. Support was likely to be found at October 13th low, 0.9426, while resistance was to be met at October 28th high, 0.9623.

According to data by the Housing Industry Association (HIA), new home sales in Australia rose 6.4% in September compared to the preceding month, following another 3.4% gain in August. A 20% increase in unit sales has been the major factor behind the overall result.

At the same time traders are pricing in no chance of a raise in the benchmark interest rate by the Reserve Bank of Australia (RBA) during the next 12 months, according to a Credit Suisse Group AG index, because mining sector investment boom appears to be fading, unemployment is forecast to rise, while the renewed concerns that national currency is still overvalued urged banks policymakers to maintain the easing program intact. What is more, traders saw a 38% probability that the central bank will cut its benchmark by 25 basis points during May next year, swaps data compiled by Bloomberg showed today. The odds of such an action were 30.5% last week.

Meanwhile, market participants began focusing on the outcome of Federal Reserve Bank’s two-day policy meeting, as it is expected that no changes in stimulus will be introduced this month. The central bank will likely reduce the current scale of its asset purchases at its meeting in March next year, according to a survey of economists conducted by Bloomberg on October 17th-18th. Federal Reserve policymakers abstained from trimming the pace of stimulus in September, as more evidence that US economy is indeed recovering was to be obtained.

In addition, US companies operating in the private sector probably added 148 000 new jobs in October, after 166 000 new positions in September, according to the median estimate of economists participated in another survey by Bloomberg News. A higher than projected number of new job positions will certainly raise the appeal of the US dollar. The ADP Research Institute will release the official figures today. “If we see improvements in U.S. economic data, that would increase the likelihood of U.S. tapering leading to dollar strength and causing the Aussie to weaken,” said David de Ferranti, a Sydney-based market analyst at FXCM Inc., cited by Bloomberg. “The currency will find buyers near the 94-cent level”, he also said.

Elsewhere, the Aussie was advancing against the euro, with EUR/AUD cross down 0.32% on a daily basis to trade at 1.4459 at 7:36 GMT. AUD/NZD pair was little changed, gaining 0.05% to trade at 1.1489 at 7:38 GMT. Moody’s Investors Service said that it considered reducing New Zealands AAA credit rating.