AUD/USD drops amid mixed sentiment, weak Chinese data
- AUD/USD drops more than 0.80%, trading at 0.6328 after hitting a daily high of 0.6376.
- US employment costs rise by 1.1%, above estimates, and Consumer Confidence deteriorates for a third straight month.
- The US Federal Reserve commences its two-day meeting, with expectations for rates to remain unchanged.
- The Reserve Bank of Australia faces pressure due to high inflation and strong consumer demand, with a 60% chance of a rate hike on November 7.
AUD/USD reversed its course during the North American session, dropping more than 0.80% due to a mixed market sentiment sponsored by weak economic data from China, alongside geopolitical risks attributed to the Middle East conflict. The pair is trading at 0.6328 after hitting a daily high of 0.6376.
Australian Dollar loses ground against the US Dollar as geopolitical risks and weak economic data from China weigh on the pair
Wall Street remains mixed, with the Dow Jones and the S&P 500 registering gains, except the Nasdaq Composite. The latest round of economic data from the United States (US) showed the employment costs are rising, according to the US Department of Labor. Employment Cost Index rose 1.1%, above estimates of 1%, while the Conference Board (CB) revealed Consumer Confidence is deteriorating for a third straight month.
Meanwhile, the US Federal Reserve (Fed) commenced its two-day meeting today, with officials expected to hold rates unchanged. After that, Fed Chair Jerome Powell would deliver its press conference, which would be interesting to see if he keeps the door open for another hike. Earlier in that day, the ADP Employment Change, along with PMIs, revealed by S&P Global and ISM, could stir the boat ahead of the Fed’s decision.
On Australia’s front, the Reserve Bank of Australia (RBA) remains under pressure due to high inflation and strong consumer demand. The swaps market implies around a 60% chance the RBA could hike rates from 4.1% by a quarter or percentage point on the November 7 meeting.
In the meantime, the Australian Dollar's (AUD) current leg down vs. the US Dollar (USD) was courtesy of China’s reporting October PMIs, which came weaker, with Services barely missing contractionary territory, while Manufacturing dropped below the 50 contraction/expansion level. Although it was an official statistic, traders will watch Caixin's release on Wednesday.
AUD/USD Technical Levels
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