24.10.202215:10 Forex Analysis & Reviews: AUD/USD: at the start of a new trading week

Despite China's positive macro statistics published this morning (GDP in the 3rd quarter added a solid +3.9%, higher than the forecast of +3.4%), the Chinese yuan fell sharply during today's Asian trading session. It was followed by the main commodity currencies (Canadian, New Zealand, Australian dollars). The decline in futures for the world's major stock indices, despite the bullish gap at the opening of today's trading day, also does not contribute to the strengthening of commodity currencies.

In this sense, the fall of the AUD/USD pair looks typical. As of writing, it is trading near 0.6292, having broken through strong near-term support at 0.6308.

Yesterday (22:00 GMT), not-so-convincing Australian macro statistics and the speech of RBA Assistant Governor Christopher Kent also contribute to the weakening of the Australian currency and the fall of AUD/USD: PMI in the services sector (from Commonwealth Bank) fell in October to 49.0 (from 50.6 in September), while the same PMI in the manufacturing sector (from S&P Global) fell from 53.5 to 52.8, the composite PMI (from Commonwealth Bank) fell to 49.6 from 50 .9 in September. Recall that the value of indicators below 50 indicates a slowdown in business activity.

In turn, Kent said that "the RBA board expects further interest rate hikes in the coming period," but "the size and timing of the rate increase will depend on incoming data." Such a "vague" formulation of the thesis about the prospects for the RBA interest rate cannot serve as a basis for any significant strengthening of the AUD, while other major world central banks are aggressively raising their interest rates.

So far, this is the main tool of these central banks in their efforts to contain high and rising inflation.

As follows from data released last week, employment in Australia grew less than expected. Economists believe that the recovery of the Australian labor market stalled in September. In their view, a 25 bps RBA rate hike is the most likely scenario in November, while a weakening labor market raises the possibility of a pause in the RBA rate hike cycle later in the year.

An important factor here will be inflation data for the 3rd quarter, which will be published on Wednesday.

And from the news for today, which may increase volatility in the AUD/USD pair: at the start of the American trading session, manufacturing, services, and composite PMIs (from S&P Global) in the US are expected. Their relative growth, especially above the 50 zone, will give the dollar additional bullish momentum, although it will most likely be short-term. Weak PMI, on the contrary, will have a negative impact on the USD.