The Australian dollar is trading around the .7465 cents level after recovering some ground over the weekend.
“We saw the Aussie trading a bit lower this morning on the back of the weaker than forecast Chinese services and manufacturing PMI data which was released over the weekend,” said Greg McKenna, chief market strategist at CFD and FX provider AxiTrader.
He added, “The Aussie remains under pressure as traders look to other markets.”
According to McKenna, the weaker than expected Chinese data gave traders another reason to be negative about the Aussie dollar.
“Both prints (Chinese PMI and services data) are still above the crucial 50 expansion/contraction line and neither would seem to threaten the government’s growth targets for this year,”
“But this data provides another reason for traders to sell the Aussie dollar if they wish,” McKenna said.
He noted that traders have been negative about the Aussie dollar for the past month now given that it has lost ground against the US greenback, the Euro, the British Pound and the Japanese Yen last month.
“Certainly, it (Aussie dollar) did better than the CAD and Kiwi, but it was an underwhelming performance in April which speaks not just to a lack of confidence in Australia but what looks like a re-appraisal by investors of where the best place for their investments is,” McKenna said.
At the moment, the Aussie remains under pressure as we await what is a pretty important week for forex traders.
The Reserve Bank of Australia (RBA) will release its monthly decision on interest rate tomorrow.
According to McKenna, “With the Australian dollar already falling under its own weight, the RBA could facilitate that process a little further by signalling in the governor’s statement that the door to more interest rate cuts is slightly more ajar than the market realises.”
“Looking at the charts the Aussie remains in its downtrend as traders await the next shoe to drop. Really though I could say shoes as it’s the first week of the month and so there are plenty of domestic and offshore catalysts,” McKenna said.
The Australian monthly inflation data is also due today, the RBA, trade, and HIA new home sales while offshore we have US PCE tonight, the raft of global PMI’s, the FOMC decision and statement, and of course non-farm payrolls in the US on Friday.
But against this backdrop, the AUDUSD remains in a downtrend
with parameters around 0.7560 and 0.7380 today. That seems like a reasonable range as we start the week,
according to McKenna.
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