- US dollar tumbles after weak economic data.
- US PMI S&P Global shows the lowest reading in more than a year.
- AUD/USD finds resistance around 0.6960 and losses momentum.
The AUD/USD broke above 0.6900 after the release of US economic data and peaked at 0.6962, the highest level since Thursday. The pair lost momentum and pulled back under 0.6950.
The August preliminary US S&P Global PMI report came in below expectations, particularly the Service sector index that plunged to 44.1 against expectations of a recovery to 49.2. The numbers increased concerns about the health of the US economy.
The demand for Treasuries rose after the numbers, pushing US yield sharply to the downside and at the same time weakening the greenback. The DXY dropped from above 109.00 to 108.10, it is hovering around 108.45, down by 0.48%.
During the last hour, the dollar stabilized and trimmed losses. Still, it remains negative for the day, about to post the first decline in days. The main trend is still bullish for the dollar. Attention now turns to the Jackson Hole symposium that will start on Thursday. Fed Chair Jerome Powell will deliver a speech on Friday.
Earlier on Tuesday, the Australian PMI came also below expectations. The S&P Global Composite dropped below 50 for the first time since January.
Key support at 0.6850/55
The outlook for the aussie versus the dollar improved following the rebound. On the upside, the level to break for AUD/USD now is 0.6960. On the flip side a slide back under 0.6895 would expose again the crucial support area around 0.6850/55. A break under 0.6850 should weaken the pair considerably targeting initially the 0.6800 zone.