Audusd declines as US manufacturing index drops, affecting economic outlook

AUDUSD Analysis

Performance after Tuesday
Period	Pct	Chg	Momentum
Tuesday	-0.44%	-29.4 Pips
Week to-date	-0.56%	-37.7 Pips
October	-3.22%	-222.4 Pips

Upcoming key events (London Time)

Thu 01:30 AM AUD Labour Force Monthly Employment Change
Thu 01:30 PM USD Monthly Retail Trade (1-mth)

What happened lately

The U.S. New York Empire State Manufacturing Index registered a significant decrease, dropping to -11.9 points in October from 11.5 points in September, according to data from the New York Fed. This decline indicates a contraction in manufacturing activity within the state of New York, highlighting challenges such as reduced demand or issues with supply chains that manufacturers might be facing. Such a contraction could point to broader economic concerns or specific sectoral issues that could affect overall economic performance in the U.S.

In the context of the AUDUSD exchange rate, the drop in U.S. manufacturing activity might weaken the U.S. dollar as investors assess the health of the U.S. economy and its potential growth trajectory. However, the AUDUSD rate was observed to decrease by 0.44% to 0.66937. This movement can also reflect a combination of factors including market anticipation for upcoming events affecting both economies. Looking ahead, high-impact events such as the Australian Labour Force Monthly Employment Change and the U.S. Monthly Retail Trade data, both scheduled for Thursday, could further influence the movement of the AUDUSD pair. Positive employment change data from Australia could strengthen the AUD, while robust retail trade figures in the U.S. could bolster the USD, creating potential volatility in the currency pair.

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What can we expect from AUDUSD today?

AUDUSD on Tuesday dropped -0.44% to 0.66937. Price is below 9-Day EMA while Stochastic is falling.

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

Looking ahead for the day, immediate support level is at S1 0.66793 with break below could see further selling pressure towards S2 at 0.66648. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 0.67326 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 0.66915 would indicate selling pressure.

For the week to-date, take note that AUDUSD is bearish as the pair posted lower by -0.56%.

Key levels to watch out:

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