Australia Services, Mftg Lower, AUDUSD Retreats Off the 200 SMA

AUDUSD continues to trade within the 100 pip range, and last night’s manufacturing and services PMI for May couldn’t break the range.  Moving averages have been providing support and resistance at the top and the bottom, which are good indicators to trade off of them, buying at the 100 SMA at the bottom, and selling at the 200 SMA at the top.

Australian manufacturing PMI

After dipping to the bottom of its trading range last week in response to the hawkish Federal Open Market Committee (FOMC) meeting, the AUD/USD pair experienced a resurgence in buyer interest this week. The pair rebounded from its lows, appreciating by nearly 100 pips.

Yesterday, it ascended to 0.6679, establishing new multi-session highs. This bullish movement was underpinned by a combination of improving sentiment in risk-related markets, ongoing depreciation of the US Dollar (USD), and further market adjustments following this week’s announcements from the Reserve Bank of Australia (RBA).

AUD/USD Chart Daily – The 200 SMA Rejects the Price AgainChart AUDUSD, D1, 2024.06.20 20:24 UTC, MetaQuotes Ltd., MetaTrader 5, Demo

The RBA maintained its hawkish stance earlier in the week by keeping the official cash rate (OCR) steady at 4.35%. During the press conference, Governor Bullock revealed that the RBA board has deliberated on the possibility of additional rate hikes, signaling a hawkish outlook for the Australian dollar. This hawkish sentiment, coupled with an improved risk appetite and a weakening USD, fueled the substantial recovery in the AUD/USD pair. Last night we had the Manufacturing and Services PMI figures form Australia.

Preliminary Australian Services and Manufacturing PMI

  • Manufacturing PMI: 47.5 points (prior: 49.7 points)
  • Services PMI: 51.0 points (prior: 52.5 points)
  • Composite PMI: 50.5 points (prior: 52.1 points)

Commentary by Warren Hogan, Chief Economic Advisor at Judo Bank:

Employment and Inflation Insights:

“The composite employment index declined but remains comfortably above neutral, indicating ongoing labor demand in June. The composite input price index fell below the 60 level for the first time since January 2021, suggesting that business cost growth might be easing. This potentially marks the beginning of a genuine moderation in business cost growth, which is crucial for reducing inflation in an economy that has experienced very little productivity growth in recent years. Final prices also eased but remained at a level indicating above-target inflation.

“Service sector price indicators pulled back in June, aligning with the view that inflation is gradually easing in 2024. However, index levels still point to inflation rates above the Reserve Bank of Australia’s (RBA) target of 2-3%.”

AUD/USD Live Chart

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Skerdian Meta
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Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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