The Australian Dollar (AUD) edged higher against the US Dollar (USD) on Thursday following the release of Australia’s Purchasing Managers Index (PMI) and a slight dip in US Treasury yields. At the time of writing, the 2-year and 10-year US Treasury yields stand at 4.07% and 4.23%, respectively. The modest pullback in the USD helped lift the AUD/USD pair from its recent lows.
The AUD also received support from hawkish sentiment surrounding the Reserve Bank of Australia (RBA). Positive employment data, coupled with remarks from RBA Deputy Governor Andrew Hauser earlier in the week, helped buoy expectations. Hauser emphasized that while the RBA is data-driven, it maintains flexibility in its policy approach, noting Australia’s high labor participation rate as a key factor.
The US Dollar faced renewed pressure following the Federal Reserve’s Beige Book report, which suggested that economic activity had changed little across most regions. This contrasts with August’s report, which showed slight growth in three districts and flat activity in nine.
Market participants are now focused on the S&P Global PMI data, a key indicator of US private-sector activity, due later on Thursday.
Daily Market Movers: Australian Dollar Buoyed by Hawkish RBA Sentiment
The AUD/USD pair finds support from expectations of continued hawkish policy from the RBA, despite Australia’s Judo Bank Composite PMI rising only slightly to 49.8 in October, marking a second consecutive month of contraction in private sector output.
The Federal Reserve is likely to take a gradual approach to monetary easing, as highlighted by Federal Reserve Bank of Minneapolis President Neel Kashkari earlier this week, cautioning against aggressive rate cuts.
The People’s Bank of China (PBoC) reduced its Loan Prime Rates, aligning with market expectations and potentially boosting demand for Australian exports as China’s borrowing costs decrease.
Technical Analysis: AUD/USD Faces Short-Term Bearish Pressure The AUD/USD pair trades near 0.6640 on Thursday, just above its two-month low of 0.6614, seen on Wednesday. The short-term outlook remains bearish, with the pair trading below the nine-day Exponential Moving Average (EMA) and the 14-day Relative Strength Index (RSI) below 50.
Key Support Levels:
The next support is located at the psychological level of 0.6600, which could be tested if the downtrend continues.
Key Resistance Levels:
Resistance is expected at the nine-day EMA of 0.6680, followed by the 50-day EMA at 0.6728. A break above these levels could pave the way for a potential rally toward 0.6800.
The AUD remains vulnerable to broader market movements, but hawkish sentiment surrounding the RBA could provide further support in the near term.
Related Topics:
