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Australian Dollar, AUD/USD, Economy, China, Iron Ore, Copper, RBA – TALKING POINTS
- Stronger dollar weighs on risk-sensitive Aussie after poor data
- RBA’s August policy meeting minutes in focus ahead of jobs data later this week
- AUD/USD nears the 0.7000 psychological level after sharp losses overnight
Tuesday’s Asia-Pacific Outlook
A stronger dollar weighed on the Australian dollar after poor U.S. economic data fueled recession fears. The New York Fed’s Empire State Manufacturing Index fell to -31.3 in August on weaker orders and shipments. U.S. stocks opened lower but edged lower in Wall Street trading. The benchmark S&P 500 closed up 0.40% as the Fed’s pivot bets strengthened.
On Monday, China reported weaker-than-expected retail sales and industrial production data for July. The People’s Bank of China (PBOC), China’s central bank, unexpectedly cut the one-year medium-term lending rate by 10 basis points. The unexpected move sparked demand for Chinese government bonds and pushed the country’s 10-year bond yield to its lowest level since January. The yuan fell more than 1% against the dollar.
Crude oil prices fell in New York trading even as China said it supported its economy. WTI crude oil and Brent crude oil prices fell nearly 3%. Copper and iron ore prices were also under pressure, weighing on the commodity-sensitive Australian dollar. In Europe, natural gas prices have risen as the water level of the Rhine continues to fall. Energy prices in Germany hit another record high in the coming year.
The Reserve Bank of Australia (RBA) is to release the minutes of its August monetary policy meeting today, which could shed more light on the central bank’s thinking. Australia’s second-quarter wage price index is expected to rise to 2.7% year-on-year later this week from 2.4%. A bigger-than-expected surge could fuel some aggressive RBA bets on the Australian dollar. Melbourne-based BHP Group’s second half results are also due this morning.
AUD/USD Technical Outlook
AUD/USD has broken below its 100-day simple moving average, and according to the latest calculations, the price appears poised to test the psychological 0.7000 level. The 12-day exponential moving average (pink line) provided some intraday support above psychological levels. A break below these levels would make prices negative for the month. The Relative Strength Index (RSI) is declining towards its centerline.
AUD/USD Daily Chart
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