The AUD/USD pair is slightly bearish as traders await tomorrow’s RBA interest rate decision.
Australian Industry Group (AIG) data showed that the manufacturing index rose from 46.7 to 56.3.
Australia also announced strong figures on building permits.
The AUD/USD price fell 0.20% today as traders respond to strong economic data from Australia and the upcoming U.S. general election. It is also awaiting tomorrow’s interest rate decision from the Reserve Bank of Australia (RBA). The pair is trading at 0.7015, its lowest level since July this year.
AUD/USD falls in response to production data
Australia’s manufacturing sector stable
The manufacturing sector in Australia is relatively small. It employs more than 869,000 people in the country. This is a remarkably small number when you consider that more than 12.5 million people are employed in Australia. Nevertheless, it is an important sector that supports millions of jobs in the service industry.
According to the latest figures from Markit and the Australian Industry Group (AIG), the manufacturing sector performed relatively well in October. AIG data showed that the manufacturing index rose from 46.7 in September to 56.3 in October. This was the best performance since October 2018.
Meanwhile, according to Markit, the manufacturing PMI fell from 55.4 in September to 54.2 in October. Nevertheless, the sector is in a zone of expansion, as it is above 50.
In his report, Markit explained that the strength of the sector was mainly due to an increase in new orders, which has led to higher production volumes. Orders rose for the fourth consecutive month and demand for inputs increased. In addition, manufacturers were optimistic about the next 12 months, bringing business confidence to its highest level since February. In a statement, Bernard Aw of Markit said
“Nonetheless, the longer-term outlook remained optimistic as Australian commodity manufacturers expect further easing of coronavirus restrictions and government spending to boost infrastructure spending to boost production next year.
Other economic figures from Australia were also encouraging. The country’s job advertisements rose by 9.4% in September, better than the previous 8.3%. Building permits, which are an important indicator of the economy, rose 15.4% after falling 1.6% the previous month. Permits for private homes increased by 9.7%.
The AUD/USD is falling as investors rush to safety in the run-up to the US elections and countries begin to introduce new restrictions.
Technical outlook AUD/USD
Technical Table AUD/USD
A glance at the daily chart indicates that the AUD/USD is providing important support. The current price of 0.7015 is the highest it has been during January and June. This price is also the neck line of the head and shoulder pattern. It is also below the 15-day and 25-day exponential moving averages, while the Relative Strength Index (RSI) is in a downtrend. As such, I suspect that the downtrend will continue in the near future as bears seek support at 0.7000.