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Daily brief: AUD/USD probes fresh multi-month lows to kick off September tra

Asia-Pacific sentiment on shaky ground after US stocks fall for the fourth session and China’s Caixin PMI data is in focus to round out the country’s earlier NBS PMI.

Source: Bloomberg

Thursday’s Asia-Pacific outlook

US stocks fell in overnight trading, with the Dow Jones Industrial Average leading major stock indexes into the red, falling 0.88%. The Nasdaq-100 Index (NDX) fell 0.57%, while the small-cap Russell 2000 shed 0.62%. The risk-sensitive Australian dollar is lower after the Ai Group Australian PMI for August crossed the wires this morning. The index fell into contraction, printing a 49.3 reading.

China continues to fight the Covid-19 virus. The city of Guangzhou in the south enacted fresh restrictions on Wednesday, joining a wave of new measures across the country. The lockdowns may complicate economic activity. Wednesday’s PMI data from the National Bureau of Statistics (NBS) showed the manufacturing sector remains in contraction. Caixin is set to release its PMI data today at 01:45 GMT. The private firm focuses on smaller and medium-sized firms compared to NBS data, which tracks larger factories. This should offer traders a broader picture of China’s economy.

EUR/USD moved higher, bringing the rate further above parity as European energy prices fell. Rate traders have upped their bets on the European Central Bank’s next meeting, with overnight index swaps showing a 76% chance for a 75-basis point rate hike. The aggressive shift helped to support European bond yields, offering the euro a much-needed tailwind.

Europe’s energy outlook has improved, bolstering the case for a higher EUR/USD. Germany’s 1-year forward energy prices reflect that optimism. According to GIE-AGSI data on August 29, EU storage is 80.17% full. That is up from 70.31% at the start of August. EU policymakers see gas storage lasting around 90 days, assuming normal winter conditions.

Notable events for September 01:

  • Japan – Capital Spending YoY (Q2)
  • South Korea – Exports YoY (Aug)
  • Australia – Home Loans MoM (July)
  • China – Caixin Manufacturing PMI (AUG)

AUD/USD technical outlook

AUD/USD tracked lower and looks ready to extend those losses. The Chinese PMI data didn’t do the Australian dollar any favors. The 61.8% Fibonacci retracement, a level that offered support multiple times throughout August, was breached. A declining MACD and RSI put the currency pair at a disadvantage. And with little nearby support on the chart, prices look poised to move lower.

AUD/USD daily chart

Source: TradingView

This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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