Audusd drops as US manufacturing index declines, investors await labor data

AUDUSD Analysis

Performance after Wednesday
Period	Pct	Chg	Momentum
Wednesday	-0.31%	-20.9 Pips
Week to-date	-1.05%	-71 Pips
October	-3.7%	-255.7 Pips

Upcoming key events (London Time)

Thu 01:30 AM AUD Labour Force Monthly Employment Change
Thu 01:30 PM USD Monthly Retail Trade (1-mth)

What happened lately

In the United States, the New York Empire State Manufacturing Index experienced a significant decline, falling to -11.9 points in October from 11.5 points in September. This sharp decrease reflects a contraction in manufacturing activity within the region, suggesting potential challenges in manufacturing demand and production capabilities. The negative outlook indicated by the index could be attributed to various factors, including supply chain disruptions and fluctuating demand, which continue to affect the sector. The data was reported by the New York Fed, and such a contraction may raise concerns about the overall health and momentum of the U.S. economy, particularly if it indicates broader issues within the manufacturing industry.

In Australia, market participants are closely watching the upcoming release of the Labour Force Monthly Employment Change data. This high-impact economic indicator, set to be announced on Thursday at 01:30 AM, could provide insights into the current state of the Australian labor market. A positive employment change could signal economic strength and increased consumer confidence, potentially supporting the Australian dollar. Conversely, negative employment data might suggest economic weakness, adversely impacting the currency. Meanwhile, the U.S. will also release its Monthly Retail Trade data on the same day, which is pivotal to understanding consumer spending patterns in the economy. A robust retail sales figure could indicate resilient consumer demand, offering support to the U.S. dollar.

The recent decline in the New York Empire State Manufacturing Index reflects a weaker U.S. manufacturing environment, which might apply downward pressure on the U.S. dollar if concerns about economic growth persist. This scenario could potentially benefit the AUDUSD pair, given that weaker U.S. data might reduce expectations for aggressive monetary tightening by the Federal Reserve. However, the outcome of the AUDUSD also depends on the forthcoming Australian labor data and U.S. retail sales figures. If Australia’s employment data is strong, the Australian dollar might gain, therefore possibly strengthening the AUDUSD pair. Conversely, if U.S. retail sales surpass expectations, it could lend support to the USD, potentially weighing on the AUDUSD. Overall, the impact of these data releases will likely determine near-term movements in this currency pair.

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What can we expect from AUDUSD today?

AUDUSD on Wednesday dropped -0.31% to 0.66605. Price is below 9-Day EMA while Stochastic is falling.

Updated daily direction for AUDUSD looks bearish as the pair posted lower in Wednesday trading session.

Looking ahead for the day, immediate support level is at S1 0.66453 with break below could see further selling pressure towards S2 at 0.66302. To the upside, with the current momentum bearish, we prefer to look at breakout of the recent daily high of 0.67010 as a potential indicator of buying interest. Failure to break the resistance level would continue to echo bearish sentiment. A close below 0.66580 would indicate selling pressure.

For the week to-date, take note that AUDUSD is bearish as the pair posted lower by -1.05%.

Key levels to watch out:

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