AUD/USD and NZD/USD Fundamental Analysis: Australia Contracts
It is a relatively quiet morning for the AUD/USD and the NZD/USD pairs. Prelim private sector PMI numbers from Australia drew interest early in the day.
The numbers were disappointing, with the services and manufacturing sectors contracting in March. According to prelim figures, the Services PMI fell from 50.7 to 48.2 (3-month low), with the Manufacturing PMI declining from 50.5 to 48.7 (34-month low). Economists forecast the PMIs to fall to 50.5 and 50.4, respectively.
According to the prelim survey,
- The Manufacturing PMI Output Index fell to a 19-month low of 47.2, with the Composite PMI Output Index declining to a 3-month low of 48.1.
- Weak demand weighed on business activity, attributed to higher interest rates, elevated inflation, and softer economic conditions.
- Manufacturers experienced weaker overseas demand.
- Price pressures eased though input costs remained elevated.
- Despite above-average input cost inflation, the rate of selling price inflation slowed to a two-year low.
- Optimism across the private sector improved but remained below the long-run average.
There were no stats from New Zealand to guide the Kiwi this morning, leaving market risk sentiment to provide direction.
Later today, private sector PMIs from the euro area and the US will influence as investors assess the impact of synchronized central bank rate hikes on the respective economies. FOMC member James Bullard will speak later today and could move the dial.
AUD/USD Price Action
The Aussie was down 0.05% to $0.66787. A mixed start saw the AUD/USD rise to an early high of $0.66893 before falling to a low of $0.66774.
Technical Indicators
The AUD/USD needs to move through the $0.6702 pivot to target the First Major Resistance Level (R1) at $0.6735. A return to $0.67 would signal a bullish session. However, the Aussie Dollar would need risk-on sentiment to support a breakout day.
In case of a breakout session, the Aussie would likely test resistance at the Thursday high of $0.67555 but fall short of the Second Major Resistance Level (R2) at $0.6788. The Third Major Resistance Level (R3) sits at $0.6874.
Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6649 in play. However, barring a Fed-fueled sell-off, the AUD/USD pair should avoid sub-$0.66. The Second Major Support Level (S2) at $0.6616 should limit the downside.
The Third Major Support Level (S3) sits at $0.6531.
Looking at the EMAs and the 4-hourly chart, the EMAs send bearish signals. The AUD/USD sits below the 50-day EMA, currently at $0.66843. The 50-day EMA slipped back from the 100-day EMA, with the 100-day EMA easing back from the 200-day EMA, delivering bearish signals.
A move through the 50-day ($0.66843) and 100-day ($0.67001) EMAs would give the bulls a run at R1 ($0.6735) and the 200-day EMA (0.67502). However, failure to move through the 50-day EMA ($0.66843) would leave S1 ($0.6649) in play. A move through the 50-day EMA would send a bullish signal.
NZD/USD Price Action
This morning, the Kiwi was down 0.06% to $0.62449. A mixed morning saw the NZD/USD rise to an early high of $0.62534 before falling to a low of $0.62429.
Technical Indicators
The NZD/USD needs to move through the $0.6251 pivot to target the First Major Resistance Level (R1) at $0.6292 and the Thursday high of $0.62943. A return to $0.6250 would signal a bullish session. However, market risk sentiment will remain the key driver.
In the case of a breakout session, the Kiwi would likely test resistance at $0.63 but fall short of the Second Major Resistance Level (R2) at $0.6335. The Third Major Resistance Level (R3) sits at $0.6418.
Failure to move through the pivot would leave the First Major Support Level (S1) at $0.6209 in play. However, barring a Fed-fueled sell-off, the NZD/USD pair would likely avoid sub-$0.62 and the Second Major Support Level (S2) at $0.6168. Dire private sector PMIs from Europe and the US would bring sub-$0.62 into play.
The Third Major Support Level (S3) sits at $0.6085.
Looking at the EMAs and the 4-hourly chart, the EMAs send bullish signals. The NZD/USD sits above the 200-day EMA, currently at $0.62381. The 50-day closed in on the 200-day EMA, with the 100-day EMA narrowing to the 200-day EMA, delivering bullish signals.
A hold above the 200-day EMA ($0.62381) would support a breakout from R1 ($0.6292) to revisit the $0.63 handle. However, a fall through the 50-day ($0.62201) and 100-day ($0.62158) EMAs would give the bears a run at S1 ($0.6209). A fall through the 50-day EMA would send a bearish signal.
