The AUD to USD (AUDUSD) price is down by 0.45% today as traders react to the upcoming US election and the stronger dollar. The pair is also reacting to Australia’s and Chinese manufacturing PMI numbers. It is trading at 0.7000, which is an important psychological level.
The stronger US dollar is the biggest catalyst for the AUDUSD price today. The dollar index, which is an important gauge of the greenback against its peers, is up by 0.20% today as traders wait for the US election.
While recent polls point to a Joe Biden presidency, investors are still aware that polls have been wrong before. They were wrong in the 2016 election and Brexit referendum. Therefore, traders will be waiting for the outcome of the election.
The US dollar is also reacting to the rising number of Covid-19 cases. During the weekend, the United Kingdom became the first major economy to announce another lockdown that will last a full month. The government made this announcement after the number of cases crossed the 1 million milestone. Other countries, especially those in Europe could also follow in these footsteps.
The AUDUSD price is also waiting for the outcome of the Reserve Bank of Australia (RBA) meeting that will come tomorrow. Analysts believe that the RBA will cut interest rates by about 0.15% to 0.10%, which will be the lowest level in modern times. They also see the bank maintaining a dovish tone since the economy has had a significant change.
On a positive side, strong economic data from Australia and China has helped ameliorate the pain on the Aussie. According to Markit, the country’s manufacturing PMI dropped from 55.4 to 54.2. Another data by the Australian Industry Group (AIG) showed that the manufacturing index rose from 46.7 to 56.3. In September, data showed that building approvals, home loans, and private home approvals bounced back.
The four-hour chart shows that the AUDUSD price has been in an overall downward trend after it reached a high of 0.7412 on September 1. Today, the price fell to a low of 0.7000, which is the lowest it has been since July. The price is being guided by the 25-day and 15-day exponential moving averages.
Looking at the chart, we see that the path of the least resistance is lower, which will see it test the lower side of the descending channel at 0.6962. On the flip side, a move above the 25-day EMA at 0.7050 will invalidate this thesis.
