Australian Dollar On Backfoot Ahead Of Pmi

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Australian Dollar On Backfoot Ahead Of Pmi

Australian Dollar (AUD) On Backfoot Ahead of PMI

The Australian Dollar / US Dollar (AUD/USD) continues to close the day in red for 4th time in a row. The most pressing challenges faced by the AUD are the upbeat greenback and the bond yields (US).

According to some analysts, the RBA (Central Bank of Australia) is expected to go ahead with tough monetary policies. Mr. Michele Bullock (RBA governor) has already made it clear that policy changes will be required if the inflation remains higher than the target.

Fundamental Changes In The Labor Market

The Australian labor market is also going through some changes as the 'employment change' indicator declined recently. At the same time, the unemployment rate in Australia is declining at a much faster pace than the forecasts. These two factors have made it even more difficult to decipher the Australian labor market.

According to the chief economist of Westpac, the outlook of the RBA is balanced at best, with a chance of more rate hikes in the near future. As for the inflation outlook, Westpac believes that it will rely on a change in the economic data.

If we look around, the Chinese central bank is also expected to hold a policy conference in the next few days. This will be a significant event for the AUD, considering the meeting only takes place after a period of 5 years. At the meeting, the government will look at different economic risks along with strategies to prevent them.

For now, the DXY is strong and has already recovered most of its losses as well. The market believes that it is mainly driven by the strong US economic data.

The AUD/USD is trading at the 0.6310 handle and is very close to the 0.63 support zone. Next up is the 0.6285, which is also the monthly low and is also an integral support for the AUD/USD. On the contrary, the nearest resistance for the AUD/USD is dynamic in nature and is present in the form of 14 EMA.

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