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Australian Dollar holds above 68c ahead of Australia Day Holiday

AUD - Australian Dollar

The Australian Dollar has held above the 68c mark vs the Greenback despite some weak numbers coming out of Australia’s January PMI figures. The manufacturing side saw a print of 49.1 vs an expected 49.2 and the Flash Composite Output Index was down from 49.6 to 48.6. The weakness has been driven by the recent bushfires and fundamental weakness in the Australian economy, associated with consumer constraint in the residential construction downturn and the reluctance of business to invest. Businesses have been disrupted by the bushfires through the supply chains and also through tourism. It’s not all doom and gloom and expectations for future businesses are at encouraging levels. Meanwhile, the pair has also been affected by a stronger US dollar on Friday as well as concerns over the coronavirus in China.

The AUD/USD opens this morning at 0.6824 and with Australia observing a Public and Bank holiday moves are likely to be limited. We can expect to see initial support at 0.6800 on the downside. Resistance sits at 0.6880 followed by 0.6920.

Key Movers

The US Dollar Index which measures the strength of the Greenback against a basket of six major currencies rose on Friday as data showed ongoing strength in the U.S. services sector offset a continued slowing in manufacturing to a three-year low. The IHS Markit flash purchasing managers index for manufacturing in fell to a 3-month low in January, while the services PMI strengthened to highest level since last March.

GBP/USD pulled back from two-week tops and dropped to a low of 1.3056 failing to capitalize on upbeat PMI data with speculation of Bank of England cutting rates prompted some selling. Markets are still pricing in a 45% of the BoE cutting rates this week. Meanwhile, EUR/USD hit seven-week lows after data revealed Eurozone growth was left muted at the start of 2020 with January’s PMI data expanding at the same pace that was seen in December 2019.

Expected Ranges

AUD/USD: 0.6800 - 0.6880 ▼

AUD/EUR: 0.6160 - 0.6240 ▲

GBP/AUD: 1.8900 - 1.9350 ▼

AUD/NZD: 1.0270 - 1.0440 ▼

AUD/CAD: 0.8920 - 0.9040 ▼