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Aussie dollar falls for a twelfth consecutive day

AUD - Australian Dollar

The Australian dollar is weaker this morning when valued against the greenback, reaching a 24-hour low of 0.6746, falling for a twelfth consecutive day. The Aussie dollar came under pressure in early trade as China's central bank revealed it was devaluing the nation's currency, breaking the 7 yuan to the US dollar mark for the first time. This comes as there are growing fears the US-China trade battle is now a full-blown currency war that will hurt the global economy. On the data front yesterday in China we saw the release of Chinese Caixin Services PMI, came in at 51.6 for July, missing the expected 52.9 and down from the preceding month's reading of 52.00.

Looking ahead today on the data front and we will see the release of Australian Trade Balance and ANZ Job Advertisements at 11.30am. Later in the session at 2.30pm the Reserve Bank of Australia is set to have a monetary policy meeting, although this time, policymakers are expected to maintain rates unchanged at 1.00%. From a technical perspective, the AUD/USD pair is currently trading at 0.6753. We continue to expect support to hold on moves approaching 0.6720 while now any upward push will likely meet resistance around 0.6785.

Key Movers

On Monday we saw a U.S. dollar sell-off continue as risk-off took over financial markets after China allowed the yuan to breach the 7 per dollar level for the first time in 11 years, a level last seen in 2008, in move seen as a direct response to U.S. President Donald Trump’s escalation of their trade conflict through more tariffs. The move opens up a new front that could dramatically raise volatility in the forex market after a prolonged period of calm. On the data front yesterday US Markit indexes came in better-than-anticipated, but the official ISM Non-Manufacturing PMI dropped in July to 53.7 from 55.1 and below the expected 55.5. The backdrop in services output further weighed on the greenback.

The Great British Pound hit a 23-month low vs. euro as a no-deal Brexit continues to grow. The pound was last down by 0.7% against the euro after falling as low as 92.04, the lowest it has been since early September 2017. On the data front yesterday in the we saw the release of UK Markit Services PMI, which resulted in July at 51.4, improving from the previous 50.2 and beating the market’s expectations. Looking ahead for the rest of this week in the UK and the macroeconomic calendar is quite full starting with the July Services PMI today and ending with second-quarter growth data on Friday. From a technical perspective, the GBP/USD pair is currently trading at 1.2142. We continue to expect support to hold on moves approaching 1.2120 while now any upward push will likely meet resistance around 1.2190.

Expected Ranges

AUD/USD: 0.6720 - 0.6830 ▼

GBP/AUD: 1.7850 - 1.8050 ▲

AUD/NZD: 1.0200 - 1.0400 ▼

AUD/EUR: 0.5970 - 0.6080 ▼

AUD/CAD: 0.8900 - 0.9000 ▼