The Australian Dollar (AUD) saw a decline following the release of key economic data, including a trade surplus of 5,589 million for June, surpassing expectations but still below the previous reading. The market now anticipates a 50% chance of an RBA rate cut in November, putting pressure on the Australian Dollar. This decline was also influenced by China’s Manufacturing PMI coming in below expectations, impacting the Australian market significantly as China is a close trade partner.
Despite the weakening Australian Dollar, the downside of the AUD/USD pair may be limited as the US Dollar faces challenges following the Federal Reserve’s decision to keep rates unchanged. Traders will be looking for further direction from US economic data such as ISM Manufacturing PMI and weekly Initial Jobless Claims. The Judo Bank Australia Manufacturing PMI also showed a continued deterioration in manufacturing sector conditions, though at a slower pace. Federal Reserve Chair Jerome Powell mentioned a possible rate cut in September during a press conference.
Technical analysis indicates that the Australian Dollar is currently trading around 0.6540, consolidating within a descending channel with a bearish bias. The daily chart shows potential for an upward correction as the 14-day RSI is near oversold levels. Immediate support for the AUD/USD pair is at 0.6500, while resistance levels are at 0.6555, 0.6575, and the nine-day EMA at 0.6581. A break above these levels could drive the pair towards a six-month high.
In addition, NAB Economics forecasts that the RBA cash rate will remain stable until May 2025 before declining to 3.6% by December 2025. The Australian Prudential Regulation Authority (APRA) also announced a hold in macroprudential policy settings following an assessment of economic conditions. On the international front, China’s NBS Manufacturing PMI posted slightly above expected but below prior readings, impacting the Australian market. Australia’s Building Permits also fell in June, exceeding market expectations.
The percentage change of the Australian Dollar against major currencies indicates weakness against the Japanese Yen. The heat map displays these changes, with the AUD showing declines against various currencies. Overall, the Australian Dollar faces pressure from economic data releases and external factors like China’s PMI readings and the Federal Reserve’s decisions. Traders will closely monitor upcoming data releases for further direction on the AUD/USD pair and the Australian economy as a whole.
