Australian Dollar extends losses after weak data

• Australian Dollar declines amid recession fears
• Consumer and business sentiment in Australia continues to deteriorate, dragging down the Australian Dollar amid recession fears
• RBA maintains its hawkish stance with rate cuts unlikely in the near term despite global easing trends
• China’s trade data shows mixed results with strong exports but weak imports, indicating ongoing economic challenges

The AUD/USD declined by 0.10% to 0.6660 in Tuesday’s session, impacted by weak Australian data and a steady US Dollar.

Amidst uncertainty in the Australian economy and concerns over persistent inflation, financial markets anticipate a modest interest rate cut of only 0.25% in 2024. This is in line with the Reserve Bank of Australia’s (RBA) firm stance on inflation, which has led to a relatively hawkish outlook for monetary policy.

Daily digest market movers: Australian Dollar declines as data raises recession fears

• Australian Dollar falls against US Dollar following weak consumer and business confidence data
• Westpac Consumer Sentiment Index dipped 0.5% in August, aligning with elevated concerns about the economic and employment outlook
• Business confidence and conditions deteriorated in August as per NAB’s Business Confidence Index, reaching their lowest levels since November and January 2022, respectively
• Despite the Reserve Bank of Australia’s firm stance against rate cuts due to inflationary concerns, analysts predict a shift toward an easing cycle with a rate cut anticipated by December
• On the data front, China’s August exports surpassed expectations by growing 8.7% YoY, largely influenced by favorable base effects
• Import growth, however, was weaker than anticipated at 0.5%, indicating limited progress in boosting domestic demand
• All economic news in China is closely followed by Aussie traders as it is a close trading partner from Australia

AUD/USD technical outlook: Bearish momentum continues with bulls nowhere to be found

In the last several sessions, the AUD/USD pair has created lower highs and lower lows, suggesting that the overall outlook is bearish. Tuesday’s decline of around 0.1% continues this trend and reinforces the bearish outlook. The Relative Strength Index (RSI) is currently at 42, which is in the negative area and suggests that selling pressure is rising.

The Moving Average Convergence Divergence (MACD) is also bearish with the histogram turning red and rising.