AUD/USD and NZD/USD rises. USD tumble

03.12.2019 09:56|Conotoxia Ltd Analyst Team

The Australian dollar (AUD) and the New Zealand dollar (NZD) may once again attract investors' attention thanks to the above-average appreciation that began yesterday and continues until this morning. On the one hand, it may be due to the weakness of the US dollar, and on the other, the strength of AUD and NZD due to local factors.

The week has started by publishing data for the Chinese industry in the form of PMI reading. This index rose in November to 51.8 points, breaking the market consensus of 51.4 points. The result was the best for almost three years. According to the publication, production and new orders increased significantly, and new export orders recorded the first monthly increase in a year and a half. Such positive data from China could quite clearly translate into the currencies of Australia and New Zealand. Due to the location of these countries, their economies are very dependent on China.

Nevertheless, the most powerful blow to the currency market was yesterday's publication from the United States. The ISM manufacturing index fell to 48.1 points, against a consensus of 49.2 points. The ISM reading indicated the fourth consecutive month of decline in production activity, with a sharp decline in new orders and employment. World trade remains the most important problem for the industry – according to Monday's data.

Such weak publication could be a reason of a strong fall in the value of the US dollar. In this way, favorable data from China and unfavorable data from the USA, weakening USD, could have a one-way impact on the currency pairs: AUD/USD and NZD/USD. The AUD/USD exchange rate reached the highest level in three weeks, and the NZD/USD exchange rate reached the levels recently observed in early August this year. The Australian dollar could also strengthen by today's statement of the Reserve Bank of Australia (RBA), which left the main interest rate unchanged at 0.75 percent, saying that the global risk has recently decreased, which in turn reduced the chances of interest rate cuts at the beginning of the next year.

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AUD/USD daily chart. Conotoxia trading platform

From the perspective of the chart and technical analysis, the AUD/USD exchange rate approaches the annual downward trend line. If it is exceeded, then chances for a more permanent rebound in the AUD/USD currency pair may increase, especially since very strong support in the area of 0.6686 was established earlier.


Daniel Kostecki, Chief Analyst Conotoxia Ltd.

Materials, analysis and opinions contained, referenced or provided herein are intended solely for informational and educational purposes. Personal Opinion of the author does not represent and should not be constructed as a statement or an investment advice made by Conotoxia Ltd. All indiscriminate reliance on illustrative or informational materials may lead to losses. Past performance is not a reliable indicator of future results.

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