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MTrading Team • 2023-12-05

AUDUSD drops on RBA’s dovish halt, focus on US ISM Services PMI, JOLTS Job Openings

AUDUSD drops on RBA’s dovish halt, focus on US ISM Services PMI, JOLTS Job Openings

The risk appetite remains dicey, mostly downbeat as Moody’s downgrade China’s credit outlook. Also challenging the sentiment are fears about rising cases of Pneumonia in the dragon nation, as well as the market’s cautious mood ahead of this week’s top-tier data.

Even so, the previous day’s downbeat US data prodded the US Dollar bulls and allowed the Gold Price to edge higher. That said, Crude Oil struggles to recover despite Saudi Arabia’s push for more production cuts.

Elsewhere, AUDUSD dropped the most among the G10 currency pairs as the Reserve Bank of Australia (RBA) concerns, as well as due to pessimism surrounding Australia’s biggest customer China. That said, EURUSD and GBPUSD also print mild losses while USDJPY drops while tracing the downbeat yields, despite softer Tokyo inflation data.

It’s worth observing that the BTCUSD and ETHUSD retreat from the yearly high as Crypto traders seek more clues to justify the previous rally.

Following are the latest moves of the key assets:

  • Brent oil licks its wounds at a two-week low, mildly bid near $78.50 by the press time.
  • Gold price clings to minor gains around $2,035 at the latest, following the previous day’s more than $125 drop from the all-time high.
  • USD Index lacks clear directions at a two-week high around 103.60 as we write.
  • Wall Street closed with minor losses while Asia-Pacific stocks edged lower. Further, equities in Europe and the UK begin the day on a dicey floor.
  • BTCUSD and ETHUSD retreat from multi-month highs to around $41,500 and $2,200 by the press time.
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Dicey markets fail to propel US Dollar…

Despite the market’s anxiety ahead of the key US jobs report and mixed concerns about the Fed, the US Dollar struggles amid downbeat US data and softer yields. That said, US Factory Orders for October dropped to the lowest since April 2020, -3.6% versus -2.8% expected and +2.3% prior.

On the other hand, geopolitical woes and fears of another virus outbreak in China also roiled the sentiment.

Israeli defense Minister said that he expects the war to continue at its current intensity for at least 2 months, which in turn flagged the market’s geopolitical fears and put a floor under the US Dollar, especially amid a corrective bounce in the yields.

Talking about the data, China’s Caixin Services PMI for November came in 51.5 versus 50.8 expected and 50.4 prior, which in turn pushed back economic fears about the dragon nation. Earlier on Tuesday, the Reserve Bank of Australia (RBA) matched market expectations while keeping the benchmark rates unchanged. However, a less hawkish tone in the RBA Statement exerted downside pressure on the Australian Dollar (AUD) afterward.

Apart from the RBA, Australia’s ANZ Consumer Confidence figures also weighed on the AUDUSD price as the weekly sentiment gauge dropped to 76.4 from 76.7 the week before. The details also stated that a serious turnaround in inflation would likely be required to see the index move meaningfully higher in 2024.

Further, the Tokyo Consumer Price Index (CPI) eased in November and favored the Bank of Japan’s (BoJ) ultra-easy monetary policy, which in turn challenged the USDJPY sellers. The inflation data, however, again came in more than the BoJ’s 2.0% target and hence challenged the Yen sellers.

On a different page, Saudi Energy Minister Price Abdulaziz bin Salman tried to push back the Oil sellers by saying that the OPEC+ oil supply cuts can “absolutely” continue past Q12024. On the same line could be the softer US Dollar and firmer China data, as well as the cautious optimism in the market.

Additionally, European Central Bank (ECB) Vice President Luis de Guindos said that the recent inflation data is good news but it is too early to declare victory, which in turn allowed EURUSD bears to take a breather at a three-week low. On the contrary, ECB executive board member Isabel Schnabel said that “further rate hikes are ‘rather unlikely’ after the latest inflation data. The same, however, failed to recall the Euro sellers amid the market’s cautious mood ahead of today’s US ISM Services PMI and Eurozone Producer Price Index (PPI).

  • Strong buy: USDCAD
  • Strong sell: ETHUSD, GBPUSD, Gold
  • Buy: USD Index, Nasdaq, USDJPY

An active day ahead…

Be it the Eurozone PPI or the US ISM Services PMI, not to forget the US JOLTS Job Openings and S&P PMIs for November, the economic calendar has more signals to entertain the momentum traders. The same could allow the market players to reverse the previous day’s US Dollar rebound in a case where the US catalysts bolster the dovish Fed bets.

May the trading luck be with you!