Daily Digest Market Movers: Australian Dollar extends losses after key economic data
The Australian Dollar (AUD) has been facing challenges against the US Dollar (USD) following the release of key economic data on Wednesday. Australia’s Gross Domestic Product (GDP) showed a 0.2% growth QoQ in the second quarter, an improvement from the previous quarter’s 0.1% growth but below the expected 0.3%.
Additionally, China’s Services Purchasing Managers’ Index (PMI) dropped from 52.1 in July to 51.6 in August, impacting both countries due to their close trade partnership. However, the upbeat Australian August Purchasing Managers Index (PMI) provided some support to the AUD, limiting the downside of the AUD/USD pair.
Investors are now eagerly awaiting Reserve Bank of Australia (RBA) Governor Michele Bullock’s speech on Thursday for insights into the central bank’s stance on monetary policy.
On the other hand, the US Dollar received support as traders assessed the economic and monetary outlook. The ISM Manufacturing PMI revealed a contraction in factory activity for the fifth consecutive month, raising concerns about the impact of high interest rates on the US economy.
Looking ahead, traders are keeping an eye on upcoming economic data, including the ISM Services PMI and Nonfarm Payrolls (NFP), to gauge the potential size of an anticipated rate cut by the Federal Reserve this month.
Technical Analysis: Australian Dollar falls to near 0.6700
The Australian Dollar is currently trading around 0.6700, with the AUD/USD pair showing a short-term bearish trend as it breached below the nine-day Exponential Moving Average (EMA). The 14-day Relative Strength Index (RSI) also confirms the bearish bias as it moved below the 50 level.
In terms of support, the pair may target the throwback level at 0.6575 and potentially reach the lower support at 0.6470. On the upside, resistance levels include the 14-day EMA at 0.6729 and the nine-day EMA at 0.6742, with a break above these EMAs possibly leading to a test of the seven-month high at 0.6798.
Analysis and Breakdown
The Australian Dollar has been struggling against the US Dollar following mixed economic data, including Australia’s GDP growth and China’s PMI. Investors are eagerly anticipating RBA Governor Bullock’s speech and monitoring US economic indicators for clues about potential rate cuts. Technical analysis suggests a bearish trend for the AUD/USD pair, with key support and resistance levels to watch. Understanding these factors can help individuals make informed decisions about their investments and financial strategies.