Audusd declines amid economic challenges in the US and Australia

AUDUSD Analysis

Performance after Wednesday
Period	Pct	Chg	Momentum
Wednesday	-0.53%	-33.1 Pips
Week to-date	-0.44%	-27.9 Pips
April	0.21%	13.1 Pips

Upcoming key events (London Time)

Thu 02:30 AM AUD International Trade in Goods (1-mth)
Fri 01:30 PM USD Nonfarm Payroll Employment
Fri 01:30 PM USD Average Hourly Earnings (12-mth)

What happened lately

In the United States, there was a slowdown in the manufacturing sector as evidenced by the decline in new orders for manufactured goods, which dropped to 0.6% in February from a revised 1.8% in January. This lower demand for manufactured goods suggests potential cooling in the manufacturing industry, which may raise concerns about industrial growth in the economy. Moreover, the Job Openings and Labor Turnover Survey (JOLTS) reported a decrease in job openings from 7.74 million in January to 7.568 million in February. This decrease in job openings may indicate a softening in labor market demand, signifying potential challenges in the job market.

In Australia, several economic indicators highlighted challenges in the economic outlook. Dwelling approvals fell sharply, decreasing to -0.3% in February from 6.3% in January, indicating weak residential construction activity. The Australian Industry Group’s Industry Index also saw a decline, falling to -22.2 points from -17.6 points in January, suggesting a contraction in the industrial sector. Despite such downturns, inflation, as indicated by TD Securities, increased to 2.8% in March from 2.2% in February, signaling potential inflationary pressures. Additionally, the retail trade turnover experienced a slight decrease, dropping to 0.2% from 0.3% in January. The Reserve Bank of Australia’s decision to keep the cash rate target unchanged at 4.1% reflects a posture of caution amidst these mixed economic signals.

The news from both the U.S. and Australia might have implications on the AUDUSD currency pair. The decline in U.S. manufacturing orders and job openings could weigh negatively on the U.S. dollar, as they suggest potential slowing economic growth. In contrast, the combination of mixed economic data from Australia, such as lower dwelling approvals and retail sales but rising inflation, could put pressure on the Australian dollar, especially with the unchanged monetary policy stance. Consequently, as seen on Wednesday, the AUDUSD dropped by -0.53% to 0.62516, reflecting these economic challenges. Looking ahead, high-impact news such as Australia’s International Trade in Goods data and the U.S. Nonfarm Payroll Employment figures, along with Average Hourly Earnings, will further shape market expectations and influence AUDUSD movements in the coming days.

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What can we expect from AUDUSD today?

AUDUSD on Wednesday dropped -0.53% to 0.62516. Price is below 9-Day EMA while Stochastic is falling.

Updated daily direction for AUDUSD looks bearish as the pair posted lower in Wednesday trading session.

Looking ahead for the day, immediate support level is at S1 0.62044 with break below could see further selling pressure towards S2 at 0.61572. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 0.63410 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 0.62255 would indicate selling pressure.

For the week to-date, take note that AUDUSD is mixed as compared to the prior week.

Key levels to watch out: