AUD slumps on China downgrade fears, RBA on hold
Briefly.
The Dollar Index (DXY), a popular gauge of the greenback’s value against a basket of 6 major currencies, rebounded to 104.05, a key level, from 103.25 yesterday.
In yesterday’s economic data, US JOLTS job openings fell to 8.73 million from 9.35 million. The monthly survey of job openings and labor turnover was the lowest since March 2021.
However, the US ISM services PMI rose to 52.7 from 51.8, beating expectations of 52.2. Growth in the services sector hit a three-month high in November.
The Australian dollar (AUD/USD) slumped to 0.6555 (0.6625) after the RBA left its cash rate unchanged at 4.35%. Markets perceived the move as a dovish hold despite the RBA’s language.
Against the Japanese Yen, the Dollar rose to 147.30 from 146.80. The Bank of Japan‘s latest inflation report showed that Tokyo’s annual core CPI fell to 2.3% from 2.7% previously and forecasts were for 2.4%.
The Euro (EUR/USD) fell to 1.0785 from 1.0845, below the 1.0800 support level. The Eurozone’s final services PMI beat expectations, but broad-based US dollar strength weighed on the euro.
The Pound Sterling (GBP/USD) fell to 1.2585 from 1.2625, its lowest level in a week. The British currency was hammered by an overall stronger greenback. The UK’s services PMI came in higher than forecast at 50.9 versus 50.5.
The dollar was moderately higher against the Asian/EMFX currencies. However, the USD/CNH (Dollar-Offshore Chinese Yuan) jumped to 7.1735 from 7.1285 after Moody’s warned of a possible downgrade of China.
USD/THB (Dollar-Thai Baht) rose to 35.30 from 34.85. The greenback closed at 1.3415 versus the Singapore dollar (USD/SGD) from 1.3330.
AUD/USD – The Aussie Battler fell to 0.6555 from 0.6625 yesterday against a generally stronger US Dollar. The overnight low for the AUD/USD was 0.6544. The Australian dollar was trading at 0.6625 against the greenback yesterday.
EUR/USD – The Euro fell to 1.0785 (1.0845) against the Dollar, breaking through the 1.0800 support level. In choppy trading, the overnight low was recorded at 1.0778. The common currency traded to an overnight high of 1.0847.
USD/JPY – The greenback rose against the Japanese yen to close at 147.30 in New York from 146.80. The overnight high for the USD/JPY was 147.39. The overnight low for the USD/JPY was 146.56.
GBP/USD – The British Pound fell to 1.2585 against the US Dollar from 1.2625. The British Pound rose to an overnight high of 1.2652 before sliding lower. The overnight low for the GBP/USD was 1.2578.
On the lookout
Today’s economic calendar picks up, starting with Japan’s Reuters Tankan Index for December (f/c 8 from 6 – ACY Finlogix).
Australia follows with its Q3 GDP growth (q/q f/c 0.4% from 0.4%; y/y f/c 1.8% from 2.1% – ACY Finlogix).
Germany will lead Europe with its October Factory Orders (m/m f/c 0.2% from 0.2%). The Eurozone follows with its October Retail Sales (m/m f/c 0.2% from -0.3%; y/y f/c -1.1% from -2.9% – ACY Finlogix).
The U.K. releases its November Global Construction PMI (f/c 46.3 from 45.6 – ACY Finlogix) and the Bank of England‘s UK Financial Stability Report.
The U.S. releases its November ADP Non-Farm Employment Change (f/c 130K from 113K – FX Street).
The Bank of Canada holds its monetary policy meeting and statement. Canada will also release its IVEY PMI Index for November (seasonally adjusted f/c 54.2 from 53.4 – FX Street).
Trading Perspective
The Dollar rebounded against most of its currency rivals after several days of losses. Weaker results in the Euro (EUR/USD), Aussie (AUD/USD) and Pound (GBP/USD) lifted the greenback.
The Dollar is expected to maintain its bullish tone against its peers in Asia today, as markets prepare for Friday’s U.S. payrolls report. Forex volatility will remain high, so keep those tin helmets on.
AUD/USD – Look for immediate support for the Aussie Dollar today at 0.6540 (overnight low traded at 0.6544). The next support level is 0.6510. On the upside, immediate resistance is at 0.6585, followed by 0.6610. Look for another choppy trading day for the Aussie, likely between 0.6520-0.6620. Prefer to buy dips as the market feels oversold.
EUR/USD – The common currency fell to 1.0785 against the generally stronger greenback after breaching the 1.0800 level. Look for immediate support at 1.0750 followed by 1.0720. Immediate resistance can be found at 1.0810, 1.0840 and 1.0870. Look for the euro to trade in a likely range of 1.0750 to 1.0850 today. Trade the range.
USD/JPY – The U.S. Dollar closed at 147.30 against the Japanese Yen, up from 146.80 yesterday. Today, look for immediate resistance at 147.60 followed by 147.90. Immediate support is at 147.00, 146.70, and 146.40. Look for the USD/JPY to consolidate today in a likely range of 146.50-147.50. Trade the range, nice and wide.
GBP/USD – The Pound slid to 1.2585 (1.2625) against a generally stronger Greenback. Look for immediate support for the British Pound at 1.2570 (overnight low traded at 1.2578). Next support is at 1.2540 and 1.2510. Immediate resistance is at 1.2610 and 1.2640. Look for the GBP/USD to consolidate in a likely range of 1.2570-1.2670. Buying Sterling on weakness is preferred.
