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The Australian dollar has slid from weekly highs above 0.7200 amid a trading day with relatively sour market sentiment with negative impact around the end of May flows that enhanced the US dollar while US Treasury yields exhibit some momentum.
AUD/USD pair has retreated during the US session, from weekly highs above 0.7200, spurred by the prevalent risk-off market sentiment.
On the last trading day of May 2022, the AUD/USD pair reflects the stronger US dollar benefiting from end of month flows. US equities are still trading with losses, ranging from 0.46% to 1.80%. The Eurozone’s inflation data in May, which enlarged by 8.1% YoY, higher than the estimates of 7.8% does trigger concerns about high prices and a global stagflation scenario. Chinese data boosted the AUD/USD, which was suffering under some selling pressure, though in the end, it failed to cling to the 0.7200 mark.
Positive news from China revealed that May PMIs are better than expectations. The Manufacturing PMI printed a solid 49.6, higher than the estimated 49.0. The Non-Manufacturing PMI index rose by 47.8 versus anticipated 45.5. Some covid-related restrictions were lifted in Beijing and Shanghai paving the way for a more hopeful outlook for the second largest economy in the globe and Australia’s largest trading partner.
On Wednesday, the Australian economic calendar will release first quarter Gross Domestic Product as well as China’s Manufacturing PMI in May. the AUD/USD direction will potentially react to Wednesday’s data.
The US economic calendar awaits the US ISM Manufacturing and Non-Manufacturing PMIs data, US employment data, led by the Nonfarm Payrolls, and the ADP and JOLTs openings report.
Technically; the AUD/USD daily chart reflects neutral-downward biased performance. Above the 0.7200 mark, AUD/USD buyers are poised to encounter a firm supply area in the 0.7229-56 region, the confluence of the 50, 100, and the 200-day moving averages (DMAs), a reason for the pair’s dip below 0.7200, as AUD/USD bears stepped in. If the AUD/USD records a daily close under the 0.7200 mark, that will avail additional weakness. The AUD/USD first support would be the 30 May low at 0.7152.
