Australian dollar turns higher after impressive Australia and China data
The Australian dollar rose slightly against the USD as traders reacted to strong economic data from Australia and China. According to AIG, the manufacturing index in the country rose to 53.5 from the previous 51.5. Other data showed that job advertisements in the country rose by 16.7% after rising by 41.4% in the previous month. Meanwhile, in China, data from Caixin showed that the manufacturing PMI rose to 52.8 from the previous 51.2. This data means that the Chinese manufacturing sector continued to recover in July.
The Japanese yen pared some gains made on Friday as traders reacted to data from the country. Data from Markit showed that the manufacturing PMI rose to 45.2 in July from the previous 40.1. Analysts were expecting the PMI to climb to 42.6. Further data showed that the country’s economy shrank at an annualised pace of 2.2% in the first quarter compared with the final 3 months of 2019. This was better than the 2.8% decline that analysts were expecting.
Looking ahead, we will receive manufacturing PMI data from around the world today. For example, analysts expect that the PMI in Germany and the UK will grow to 50.0 and 53.6, respectively. In the US, they expect that the PMI will rise to 53.6 from the previous 52.6. These numbers are expected to show that business activity continued to recover in July as countries continued to reopen. Additionally, we will receive corporate earnings from companies like Berkshire Hathaway, Global Payments, Clorox, McKesson, and Tyson Foods among others.
The EUR/USD pair rose slightly to the current level of 1.1767. On the four-hour chart, the price is significantly lower than last month’s high of 1.1905, which was its highest level in a few years. The RSI has moved from the overbought level of 77 to about 50. Also, the price is slightly above the 50-day and 100-day exponential moving averages. Therefore, the pair is likely to continue falling as bears target the next support at 1.1700.
The AUD/USD pair rose slightly after upbeat economic data from China and Australia. The pair is trading at 0.7133, which is a few pips above Friday’s low of 0.7110. On the four-hour chart, the price has just moved below the 50-day and 100-day EMAs. Similarly, the RSI and the Demarker indicator have started to fall. This implies that bears are starting to prevail, which will see the price move below 0.7100.
On Friday, the USD/JPY spiked as traders moved to take profits. The pair jumped to a high of 106.45 from the previous low of 104.17. On the four-hour chart, the price is between the 23.6% and 38.2% Fibonacci retracement level. It has also moved slightly above the 50-day and 100-day EMAs. Therefore, after this big bounce, the pair is likely to form a bullish pennant because of indecision. It will then likely continue moving higher as bulls aim for 107.