AUD/USD fell below the converging 10- and 21-DMAs and May 31 daily low with help from better-than-estimated U.S. May ISM non-manufacturing data, and a much deeper fall can’t be ruled out if existing bearish influences are reinforced by U.S. payrolls data.
Australia’s economic growth is anemic, slowing to +0.1% for Q1, which was below the consensus estimate of +0.2%.
The data may help the RBA lean dovish especially after RBA Governor Michele Bullock acknowledged to lawmakers that the economy is very weak.
A slide in commodity prices is reinforcing downside risks for AUD/USD.
Iron-ore (DCIOc2) and copper (HGv1) have been trending downward since the third week of May. Further price declines could negatively impact the Australian economy.
The U.S. May payrolls report is now in focus and may determine if AUD/USD drops significantly, with the Reuters consensus forecast for a rise to 185k from 175k in April. An as-expected or above estimate result may encourage the Fed to hold rates high for longer.
AUD/USD might revisit April’s low on a robust U.S. employment report.
A downbeat payrolls report, similar to May ADP, could be a lifeline for AUD/USD longs as U.S. yields and dollar may sink on higher probabilities the Fed cuts rates in 2024.
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