The AUDUSD currency pair experienced a boost in anticipation of the Reserve Bank of Australia’s (RBA) interest rate decision and better-than-expected Chinese Manufacturing data. However, the RBA ultimately held rates steady at 4.1%, influenced by the prevailing macroeconomic conditions. Although the RBA left the possibility of further rate hikes open, the market had already priced in a 25-basis point increase this month, signalling a potential conclusion to the RBA’s tightening monetary policy.
The success of the previous rate hike in curbing inflation and restoring the supply-demand balance reinforces the likelihood of the monetary policy tightening coming to an end. China’s NBS Manufacturing PMI surpassed expectations, rising from 49 to 49.3, potentially bolstering demand for Australia’s commodities as China’s manufacturing sector shows slow signs of recovery. Furthermore, Australia’s Judo Bank Manufacturing PMI increased from 48.2 to 49.6, shedding light on the growing impact of both local and global demand factors.
The AUDUSD currency pair has been at the mercy of a downward trend since a breakout through the Golden Ratio failed to gain upside traction. The downward trend encouraged the currency pair to find support at 0.66427, marking the lowest point the price action has seen this month. With the RBA’s decision to hold interest rates, the 0.65978 major support may be a point of interest in driving downside momentum if a breakdown of the 0.66427 support occurs.
Meanwhile, an increase in both local and Chinese demand could encourage the price action to retest the 0.67382 resistance at the 38.20% Fibonacci level if the 0.66427 support holds once again.
The AUDUSD currency pair trended lower on the backdrop of a pause from the RBA. Since the RBA may be nearing the end of its monetary policy tightening, the currency pair may succumb to the 0.65978 major support. However, rising demand from China could boost the price action towards the 0.67382 resistance if the 0.66427 support holds once again.
Sources: TradingView, Reuters, Trading Economics
DISCLAIMER: This report has been prepared by Fairmarkets International (“The Company”). This document is not intended as an offer, solicitation or recommendation to buy or sell financial instruments or to make any investment. The Company has used reasonable efforts to obtain information from reliable sources and the report is provided without representation or warranty of any kind (neither expressed nor implied). The Company and Fairmarkets International disclaims liability for any publication not being complete, accurate, suitable and relevant for the recipient. Specifically, the Company and Fairmarkets International disclaims liability towards any user and other recipients of this report.