The AUD/USD relentless sell-off paused on Wednesday morning as investors reacted to the mixed economic data from Australia. The pair declined to 0.7430, which was about 1.65% below the highest level last week.
Australian services sector rebound
The AUD/USD price declined sharply even after the Reserve Bank of Australia (RBA) turned relatively hawkish in its meeting this week. The bank decided to leave interest rates unchanged at 0.1% during the meeting. It hinted that the first interest rate hike will happen before 2023.
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At the same time, the bank decided to end the yield curve control program and continue with its quantitative easing program.
On Wednesday, the [air was reacting to the relatively mixed data from the country. According to Australia Industry Group (AIG), the country’s construction index rose from 53.3 in September to 57.6 in the previous month.
Another data by Markit showed that Australia’s services PMI increased from 45.5 in September to 51.8 in October. This is an important number since the services sector is the most important player in the country’s economy.
The rebound was mostly driven by companies in the services sector like restaurants and hotels as the economy reopened.
On the other hand, data by the statistics agency revealed that building approvals declined by 4.3% in September. This was a significant decline from the previous month’s 7.6%. In the same period, private house approvals declined by 16%.
This weakness was likely because the country’s economy was starting to reopen in September following the lockdown that was announced.
The AUD/USD pair will next react to the American ADP jobs data and the Federal Open Market Committee (FOMC) decision. The bank is expected to be relatively hawkish during this meeting.
The three-hour chart shows that the AUD/USD pair has been in a deep sell-off in the past few days. The sell-off accelerated on Tuesday after the latest RBA interest rate decision. It managed to move below the 23.6% Fibonacci retracement level.
At the same time, the price moved below the 25-day and 50-day moving averages while the MACD has moved lower. The pair seems to be forming a bearish consolidation pattern. Therefore, there is a possibility that the Aussie will keep falling, with the next key target being at 0.7360.
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