The AUD/USD pair is currently facing downward pressure from a combination of factors, including disappointing Chinese economic data, auction of First Republic Bank, and cautious sentiment ahead of key data releases and central bank meetings. This article explores the implications of these developments and provides technical analysis of the AUD/USD pair.
China’s Downbeat Economic Data:
China’s official NBS Manufacturing PMI for April fell below market expectations to 49.2, compared to the forecast of 51.4 and the previous reading of 51.9. Although the Non-Manufacturing PMI rose above expectations to 56.4, it still fell short of March’s 58.4 reading. This weak data from Australia’s biggest customer has put downward pressure on the AUD/USD pair.
First Republic Bank Auction:
The Federal Deposit Insurance Corporation (FDIC) recently called for bids for the troubled First Republic Bank, which has seen a slump in shares and fleeing deposits. Multiple top-tier private organizations, including JP Morgan, have placed bids for the bank’s takeover. However, this raises concerns about the potential impact on the broader banking system if private players take over public banks in the future.
RBA and Fed Monetary Policy Divergence:
The Reserve Bank of Australia (RBA) and the US Federal Reserve (Fed) are scheduled to hold their monetary policy meetings this week. Recent data suggests a divergence between the monetary policies of the two central banks, which could affect the AUD/USD pair’s performance.
Technical Analysis:
The AUD/USD pair is currently trading below the round figure of 0.6600, with downward pressure expected to continue. Unless the pair rises beyond the previous support line of 0.6665, it could touch the yearly low of 0.6565.
