Australian dollar falls after essential US data, Chinese concerns

AUD/USD is falling due to a moderate rise in the US dollar after a busy economic calendar.
Weak Chinese PMIs negatively impact the Australian dollar.
The RBA expected to maintain a hawkish stance by supporting AUD/USD, but concerns about the Chinese economy persist.

The AUD/USD pair fell 0.40% to 0.6560 during Friday’s session under pressure from a moderate recovery in the US dollar and skepticism over Chinese stimulus initiatives. Weak manufacturing data from China, as indicated by Purchasing Managers’ Index (PMI) data, has had a negative impact on the Australian dollar, which is largely influenced by China’s economic condition. Despite expectations of a hawkish stance from the Reserve Bank of Australia (RBA), concerns about China’s economic prospects continue to undermine the Australian’s performance.

In terms of local data, Australia reported the third quarter producer price index, which showed signs of slowing but remains elevated.

Daily market update: Australian dollar falls amid mixed US data and concerns about the Chinese economy

Market expectations for an RBA rate cut are low, with the probability of a December cut being only 15%.
On the data side, Australia’s PPI growth slowed in the third quarter to 3.9% for the quarter, but remains well above the RBA target.
On the US front, disappointing US nonfarm payrolls data in October (12,000 vs. expected 113,000) weakened the dollar while wage inflation rose to 4%.
The U.S. services sector expanded in September, with the Services PMI rising to an above-expected 54.9. The bad news for the US is that the manufacturing PMI contracted unexpectedly, causing investor concern.
Markets are pricing in an almost certain 25 basis point Fed rate cut next week and an 85% chance of another cut in December.
Expectations for inflationary policies under former President Trump provided additional support for the US dollar.

AUD/USD Technical Outlook: Current bear momentum, sideways period on the horizon

The relative strength index (RSI) is trading near the oversold area, suggesting that selling pressure is intense but will soon reach a ceiling, while the moving average convergence divergence (MACD) histogram is red and withering. The pair’s overall technical outlook remains bearish, indicating a potential continuation of the downtrend. However, sellers may eventually run out of gas and take a breather before the next downward leg.