Trouble in AUD/USD Heighten After PMIs Record a Dip

The fresh PMI outlook:

Monday’s session started with the Australian dollar responding to a new set of economic data. The performance is coming in after a weak performance of the Australian dollar in the previous week.

The PMI data that Markit International released on Monday morning shows the Australian economy is still struggling amidst the ongoing lockdown in the country. The PMI of services stood at 43.3 while that of the manufacturing reached a dip at 51.7. This can indicate a slower rate of expansion in the economy.

What do the latest data indicate?

The downward slant of the PMI figures in the Australian economy implies that the economy will continue to be slow. The Australian dollar was the lowest-performing currency in last week’s G10 currency, ranging just 3% above the USD.

The second on the list was the New Zealand Dollar, followed closely by the Canadian Dollar. The dip in the Australian dollar can be attributed to a new wave of Delta-variant infections surging around Sydney in South Wales.

The impact of lockdown on the economy:

The lockdown in greater Sydney has been extended till the end of September as announced by NSW premier Gladys Berejiklian last week. The state leaders have implemented more restrictive measures like mandatory mask-wearing in public and curfews.

Such moves can severely affect the already weak economy and threaten recession, likely a second one since the pandemic started in 2020. 

The Reserve Bank of India’s rate hikes have plummeted in response to the situation, which is a contrast to what the traders are observing in the United States.

Robert Kaplan, president of the Dallas Federal Reserve, suggests tapering to start. However, the rise in Covid cases in the United States is a cause of concern.

As implied by Mr. Kaplan, if the signals show that the economies are slowing down due to the virus,  his stance on starting the tapering may change. 

The impact on trading:

Trading has witnessed a sharp drop during the last week after something similar was recorded in the last part of 2020. The prices have seen a sharp drop and crashed below the 200-week simple moving average during the process.

The steep drop in the prices occurred from a rising wedge pattern that was observed earlier this month. Moreover, the MACD is at its lowest level since April 2020, and the RSI prevails in the oversold territory.

Forex trading in Australia can rely on some of the best forex brokers Australia of 2021 and trading platforms that can leverage the stiff market.

Trevor Holman

Trevor Holman follows crypto industry since 2011. He joined CryptoNewsZ as a news writer and he provides technical analysis pieces and current market data. He is also an avid trader. In his free time, he loves to explore unexplored places.

Related Articles

Back to top button
Bitcoin (BTC) $ 66,043.69
Ethereum (ETH) $ 3,481.63
Tether (USDT) $ 0.999718
BNB (BNB) $ 603.26
Solana (SOL) $ 143.12
XRP (XRP) $ 0.474396
Dogecoin (DOGE) $ 0.135003
Cardano (ADA) $ 0.411759