Following the release of Australia's Q2 GDP figures and China's Caixin Services PMI data, the AUDUSD pair continues to experience upward pressure. Australia's economy expanded by 0.6%, outperforming both the 0.3% revised increase from the prior quarter (0,2% earlier) and the anticipated 0.5% rise. On an annual basis, GDP advanced by 1.8%, beating both the previous adjusted 1.4% growth and the projected 1.6% hike.
This positive momentum received a boost from China, Australia's key trading partner. The National Bureau of Statistics (NBS) reported that the Manufacturing Purchasing Managers' Index increased from 49.3 in July to 49.4 in August. However, this figure fell short of the forecasted 49.5, representing the fifth consecutive month of contraction. In contrast, the Non-manufacturing PMI improved to 50.3, matching market consensus, up from 50.1. In a separate report, the Caixin Services data unexpectedly climbed to 53.0 from 52.6, surpassing the anticipated 52.5.
The US Dollar Index saw its gains extended for a second day. The greenback's strength is supported by rising American Treasury yields: the 2-year one standing at 3.65%, and the 10-year note sitting at 4.28%. These higher yields make US assets more appealing, attracting capital inflows and surging demand for the currency. Nonetheless, the potential for a Federal Reserve rate cut this month may curb the dollar's advance. Market expectations for a 25-basis-point rate reduction in September have increased, with the CME FedWatch tool now indicating an over 91% probability, up from 86% the previous day.
In light of the statistics indicating a less robust greenback and a more powerful aussie, it might be a good idea to buy the currency pair.
Our final recommendation is to buy AUDUSD. Profits are taken at 0.6600. Stop loss is set at 0.6450.
The volume of your open position should be calculated so that the potential loss (protected by a Stop Loss order) does not exceed 1% of your deposit. If your account balance does not allow opening a position of this size, it is better to avoid entering the market on this signal and wait for other trade options that meet low-risk criteria.
This content is for informational purposes only and is not intended to be investing advice.
