This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
The AUD/USD is trading at $0.9337, down 0.17% after the Australian Industry Group construction index came in at 45.9 for April. The reading for March was 46.2, and any reading below 50.0 indicates a contraction in the sector. Overnight, Australia also reported a 0.1% increase in March retail sales, with analysts expecting an increase of 0.4%.
The main focus of the day will be on Federal Reserve chair Janet Yellen, who is due to testify in front of congress at 3pm (London time). The US central bank trimmed its bond-buying scheme by $10 billion to $45 billion last week, in line with expectations.
Ms Yellen’s stance has been dovish since she took over as Fed chair. However, now that unemployment has dropped to 6.3%, the lowest level since September 2008, Ms Yellen may take a more hawkish tone.
If Ms Yellen maintains her dovish stance we could see the Australian dollar retest the $0.94 level. If her language is more on the hawkish side we could target the 50-day moving average of $0.9241.