China’s National Bureau of Statistics recently released PMI data that has caused some mixed signals in the market. While the Non-Manufacturing PMI unexpectedly increased, the Manufacturing PMI fell slightly. This data is significant for Australia, as China is a major trading partner and accounts for a large portion of Australian exports. The steel market demand is expected to rebound in China, which could positively impact the Aussie dollar due to Australia’s role as a significant iron ore exporter.
In addition to China’s PMI data, investors are also closely monitoring the United States’ economic data and the Federal Reserve’s upcoming rate decision. The markets are currently pricing in a 70% chance of a 25-basis point rate cut in September, which could influence the demand for the US dollar. A larger rate cut of 50 basis points could lead to an AUD/USD move towards $0.68500, narrowing the interest rate differential between Australia and the US. Comments from the Fed regarding inflation, the labor market, and the rate path will also play a crucial role in shaping the market sentiment.
The upcoming US Jobs Report could heavily influence the Fed’s decision on interest rates in September. A higher US unemployment rate and softer services sector activity may lead to bets on a 50-basis point rate cut, potentially pushing the AUD/USD towards $0.68500. However, weaker-than-expected PMI data from China could hinder the momentum of the Aussie dollar. Investors should remain vigilant and stay abreast of economic data and central bank commentary to adjust their trading strategies accordingly.
From a technical standpoint, the AUD/USD has been trading comfortably above the 50-day and 200-day Exponential Moving Averages (EMAs), signaling a bullish trend. A break above the $0.67967 resistance level could pave the way for a move towards $0.68500, with potential for a further push towards the $0.68996 resistance level. On the other hand, a drop below $0.67500 could indicate a decline towards the $0.67003 support level. With the 14-period Daily Relative Strength Index (RSI) currently at 60.94, there may be further upside potential for the Aussie dollar before reaching overbought levels.
The PMI data from China, along with US economic indicators and the Fed’s rate decision, will continue to influence the AUD/USD outlook in the near term. Investors and traders should closely monitor these factors and adjust their positions accordingly to navigate the volatile currency markets effectively.