The Australian dollar is rising and looking for a broader recovery against the US dollar.
AUDUSD – Daily Chart
The AUDUSD has risen for a third consecutive day and hit resistance at the previous support of 0.6460.
Today marks the start of the Jackson Hole Symposium- a three-day annual event for central bankers. We may hear comments from central bankers ahead of the weekend, with Fed Chair Jerome Powell and ECB Chief Christine Lagarde set to speak on Friday.
Australia released the August PMI reports on Wednesday, highlighting a slowdown in manufacturing and services. Australia’s manufacturing sector continues to struggle and has declined for six consecutive months. The manufacturing PMI eased to 49.4 in August, down marginally from 49.6 in July. Europe fared worse, with Germany’s number coming in under 40 as the country struggles with recession.
New orders in Australia were down, leading to less output, and the slowdown in China means that it may not pick up anytime soon. China is Australia’s largest trading partner and is suffering some deflation and a deteriorating economy.
The services sector in Australia has also been struggling, with August PMI falling from 47.9 to 46.7, the lowest level in 19 months. The weak PMI data is proof of a slowdown in the Australian economy, and the Reserve Bank of Australia will continue to pull back on rate hikes.
Despite the weaker economy, the sell-off may be overdone, and traders will look to the Jackson Hole meeting for drivers of a weaker US dollar.
