AUDUSD drops 1.07% to 0.68225 amid economic uncertainties

AUDUSD Analysis

Performance after Wednesday
Period	Pct	Chg	Momentum
Wednesday	-1.07%	-73.8 Pips
Week to-date	0.17%	11.6 Pips
September	0.38%	25.8 Pips

Upcoming key events (London Time)

Thu 01:30 PM USD GDP annual rate
Thu 02:20 PM USD Federal Reserve Chair Jerome Powell speech
Fri 01:30 PM USD PCE Price Index, excluding food and energy (12-mth)

What happened lately

In the United States, new-home sales in August saw a significant decline of -4.7%, reversing the prior month’s robust 10.6% increase in July. This slowdown in home sales may suggest looming concerns about the housing market, potentially influenced by rising mortgage rates or decreased consumer confidence. However, the U.S. House Price Index (1-mth) offered a slight positive, seeing a modest increase to 0.1% in July from -0.1% in June, as reported by the Federal Housing Finance Agency (FHFA). This indicates that, despite the reduction in new-home sales, house prices have marginally stabilized.

In Australia, the Monthly CPI Indicator (12-month) for August dropped to 2.7% from 3.5% in July, according to the Australian Bureau of Statistics. This decrease suggests easing inflationary pressures and may point towards a balanced economic environment. Concurrently, the Reserve Bank of Australia (RBA) decided to maintain the Cash Rate Target at 4.35%, signaling a wait-and-see approach in response to the current economic conditions. The steady cash rate aligns with the reduced CPI, reflecting cautious optimism about economic stability.

The recent economic data have had a notable impact on the AUDUSD currency pair, which dropped by -1.07% to 0.68225 on Wednesday. The decline in U.S. new-home sales, albeit partially offset by stable house prices, could imply a mixed sentiment regarding the U.S. real estate market. On the Australian side, the reduced inflation rate and the steady cash rate might be seen as factors contributing to the Australian dollar’s weakness, given that lowering inflation typically reduces the probability of future rate hikes, leading to lower yield expectations. The upcoming high-impact events, such as the U.S. GDP annual rate, a speech by Federal Reserve Chair Jerome Powell, and the PCE Price Index, excluding food and energy, will be pivotal. Positive economic indicators from these events could further strengthen the USD, potentially putting additional downward pressure on the AUDUSD pair. The market will keenly watch these developments to gauge the future trajectory of the exchange rate.

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What can we expect from AUDUSD today?

AUDUSD on Wednesday dropped -1.07% to 0.68225. Price is above 9-Day EMA while Stochastic is falling.

Updated daily direction for AUDUSD looks bearish as the pair posted lower in Wednesday trading session.

Looking ahead for the day, immediate support level is at S1 0.67907 with break below could see further selling pressure towards S2 at 0.6759. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 0.69080 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 0.68176 would indicate selling pressure.

For the week to-date, take note that AUDUSD is mixed as compared to the prior week.

Key levels to watch out:

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