Wednesday saw some bullish moves in risk currencies as the US dollar weakened after more than a month of strong rally. The commodity dollar has benefited from this, with AUD/USD rising more than 100 pips. The manufacturing and services Purchasing Managers Index (PMI) data released today were weaker than expected. But unlike the European services sector, which shrank, the US services sector continued to expand.
At the same time, Australian economic data also fell short of initial expectations, with service activity already contracting. Falling US PMIs led to lower US yields, which contributed to the US dollar’s depreciation. The manufacturing PMI recorded a figure of 47 points, down from 49 points in July. The service index was weaker than expected, but remained within the expansion range at 51 points.
At the same time, service indexes for countries such as the UK, Germany and Australia fell below the benchmark 50 points, suggesting contraction. In short, the US economy is performing better in a sad global environment where the US dollar is the strongest currency. This divergence in economic performance could lead to further US dollar appreciation as the US economy looks relatively strong compared to the rest of the world.
Therefore, the bullish momentum is Australian dollar/US dollar did not last long and buyers refrained from pushing the price above the 100 SMA (green) on the H4 chart. The pair formed a reversal signal, the Doge Candlestick, and the price started to fall yesterday, recapturing most of the gains.
Shorted New Zealand Dollar/US Dollar I refrained from overexposing myself with another sell signal here as it has already happened. We remain bearish on this pair and are looking for an even higher retracement, perhaps on a smaller timeframe like the 1H chart. The market’s attention is now focused on Jerome Powell’s speech at the Jackson Hole Symposium scheduled for this evening.
AUD/USD Live Chart
Australian dollar/US dollar