The spectre of recession takes AUDUSD 1.3% lower!

The final session of the week once again elevates the recessionary tone in the markets, clearly affecting the behaviour of the Antipodean currencies, which are regarded as behemoths of the expansionary nature of the global economy. A combination of hawkish returns from central banks (yesterday's surprising decisions from Norges Bank and the BoE), comments from the FED and ECB signalling further hikes and incoming (very weak) PMI data lift the AUDUSD pair close to 1.3% lower on a daily basis. 

The Australian dollar is also directly impacted by weaker sentiment in China, where the economy is also underperforming despite the PBoC's economic stimulus measures and interest rate cuts. Next week we will see PMI data from China, which will shed some more light on the country's macro situation. Source: Reuters

On the other hand, however, today's magnitude of declines may be temporary, as a Reuters poll shows that the RBA will raise rates by a further 25bp in September to 4.35%, thus signalling a further pause (which was shaken this month by the unexpected decision to hike by 25bp, following a pause in April).  

What's more, May's labour market data showed an unexpected reduction in the unemployment rate from 3.7% in April to 3.6%, with more than 70,000 new jobs added, some four times more than economists had predicted.

AUDUSD pair, D1 interval. The Australian dollar against the US dollar is losing more than 1.3% during today's session, thus retesting the support level formed by the 50% Fibo elimination of the upward wave initiated in October 2022. On the other hand, the quotations today broke through the zone of other important supports, namely the combined zone of the 50-day and 100-day exponential moving averages (blue and purple curves, respectively), which is currently the nearest important resistance point. Source: xStation 5