Aussie declines as a country enter a technical recession
The Australian dollar declined as investors reacted to the Australian GDP data. According to the Australian statistics bureau, the country’s economy contracted by 7% in the second quarter. This followed a 0.3% decline in the first quarter, meaning that the country is in its first technical recession in almost three decades. The economy contracted by 6.3% on a year-on-year basis. The contraction was mostly because of an 8.1% decline in final consumption and a 4.9% decline in capital expenditure. Still, Australia’s contraction was better than the 32.5% and 20.5% decline in the United States and the United Kingdom, respectively.
The British pound declined against the US dollar as traders reacted to the impressive house price index data from the UK. According to the Nationwide Society, the house price index rose by 3.7% on a year-on-year basis in August. That increase was better than the 2.0% that analysts were expecting. The price rose by 2.0% on a month-on-month basis, the highest figure since 2004. The data came a day after we received upbeat mortgage lending and approvals data from the UK. According to the Bank of England, there were more than 66K mortgage approvals in July. Other data showed that manufacturing PMI rose to 55.2 in August.
The euro declined against the US dollar as traders reacted to the weak factory-gate inflation in Europe. According to Eurostat, the producer price index declined by 3.3% YoY in July. That decline was slightly better than the previous fall of 3.7%. The PPI rose by 0.6% MoM, down from the previous 0.7%. The weak PPI came a day after the statistics office released weak consumer inflation data. The data showed that the headline CPI declined by 0.2% while the core CPI rose to 0.4%. Separately, data from ADP showed that private employment increased by 428K in August, below the 950k that analysts were expecting.
The EUR/USD pair declined to an intraday low of 1.1850. On the hourly chart, the price has moved below the 50-day and 100-day exponential moving averages. It is between the 50% and 38.2% Fibonacci retracement levels. It also seems to have found some strong resistance. Still, it seems like bears are in control, which means that the price is likely to continue falling as bears aim for moves below 1.1800.
The AUD/USD pair declined after the weak GDP data from Australia. On the hourly chart, the price is between the 50-day and 100-day simple moving averages. Also, it has moved significantly lower than this week’s high of 0.7412. At the same time, the signal and main line of the MACD have moved sharply below the neutral line. The pair is likely to continue falling as bears target moves below 0.7400.
The GBP/USD declined to an intraday low of 1.3325, which is substantially lower than this week’s low of 1.3481. On the hourly chart, the price has moved below the short- and longer-term moving averages. Also, the price is above the dots of the Parabolic SAR indicator. It has also moved back to the 23.6% Fibonacci retracement level. Therefore, the pair is likely to continue falling as bears target the next support at the 38.2% retracement at 1.3300.