AUD/USD edges higher above 0.80 post-US data

The AUD/USD pair extended its daily gains in the early NA session and rose above the critical 0.80 handle as the mixed macro data from the U.S. put a modest pressure on the greenback. As of writing, the pair was trading at 0.8008, gaining 50 pips, or 0.63%, on the day.

Today's data showed that the current account deficit in the U.S. increased to $123.1 billion in the second quarter of 2017 from $113.5 billion in the first quarter, missing the market estimate of $115.1 billion and bringing the deficit to GDP ratio to 2.6% from 2.4%. Other data revealed that the import price index rose to 2.1% on a yearly basis in August, meeting the market consensus. Moreover, housing starts contracted by 0.8% despite a 5.7% jump in building permits.

The US Dollar Index, which failed to rise above the 92 handle on Monday, remains in the red on Tuesday as investors are staying on the sidelines ahead of tomorrow's important FOMC meeting. Investors will be closely watching the updated economic projections and the 'dot plot' chart. Omkar Godbole, Analyst at FXStreet, writes, "the federal funds futures market at Friday's close showed a slightly less than 50% chance of another rate hike this year. The hint may come through policy statements and/or the dot plot chart."

• Fed preview: Scope for aggressive balance sheet normalization

A hawkish Fed could allow the DXY to start a more decisive correction than the markets witnessed last week. At the moment, the US Dollar Index was at 91.67, down 0.15% on the day.

Technical outlook

The RSI indicator on the daily graph is pushing higher above the 50 handle, suggesting that the bullish momentum is likely to persist. 0.8035 (Sep. 16 high) could be seen as the initial hurdle ahead of 0.8125 (Sep. 8 high) and 0.8200 (psychological level). On the downside, supports could be seen at 0.8000 (psychological level), 0.7950 (50-DMA) and 0.7870 (Aug. 31 low). 

Today's data from the U.S.:

• US: Privately-owned housing starts in August were at 1,180,000, 0.8% below July estimate
• US: Import prices increased 0.6 percent in August
• US: Current-account deficit increased to $123.1 billion in the second quarter of 2017