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Jul 01 - 01:55 PM

AUD/USD - COMMENT-A AUD/USD Drop Below 0.7000 Can't Be Ruled Out

By Christopher Romano  —  Jul 01 - 12:25 PM

AUD/USD fell to a 6-1/2-month low Thursday on the back of broad-based U.S. dollar buying, and inflation, rates and jobs data dynamics could potentially drive the pair below 0.7000.

Headline U.S. June ISM manufacturing came in at 60.6 versus 61.0 estimates and was the lowest result since January.
That result would normally sink the U.S. dollar, but the prices paid component -- 92.1 versus the consensus 86.5 forecast -- was the highest in series history nN9N2KB022.

The price component drove September EDU2 and December EDZ2 2022 eurodollar prices sharply lower, which indicates investors are pulling forward expectations for a Fed rate hike.
The rate move rallied the dollar, which drove AUD/USD to the new low.

Technicals highlight downside risks.
AUD/USD trades below the 10- and 200-day moving averages while falling daily and monthly RSIs indicate downward momentum remains.

A big upside jobs report surprise could boost U.S. rates and dollar further, potentially deepening AUD/USD's fall.

AUD/USD bears would target the 23.6% Fibo of 0.5510-0.8007 and the December monthly low, a break of which would spotlight the 38.2% Fibo of 0.5510-0.8007 at 0.7053 and November monthly low at 0.6990.

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Source:
Refinitiv IFR Research/Market Commentary

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