Australian Dollar retraces its recent losses on subdued US Dollar

• Australian Dollar recovers ground as the Greenback snaps recent gains.
• Australia’s Judo Bank Manufacturing PMI fell to 47.7 from the previous reading of 48.2.
• China's Manufacturing PMI improved to 50.7 against the expected decline to 49.8 from 49.5 prior.
• US Core PCE Price Index YoY and MoM eased at 3.5% and 0.2%, respectively.

The Australian Dollar (AUD) manages to halt a two-day losing streak on Friday. However, the recovery in the US Dollar contributed a pressure on the AUD/USD pair. Furthermore, disappointing Chinese data on Thursday exerted downward pressure on market sentiment, causing the China-linked Australian Dollar (AUD) to decline.

Australia’s Judo Bank Manufacturing PMI for November met expectations at 47.7, showing a slight dip from the previous reading of 48.2. The Reserve Bank of Australia is set to release the RBA Commodity Index SDR later today. This data holds significance as it serves as an early indicator of changes in export prices, thereby influencing both GDP and the value of the AUD.

China's Caixin Manufacturing PMI exceeded expectations by improving to 50.7 in November, defying the anticipated decline to 49.8 from the previous reading of 49.5. This positive surprise in the data has the potential to provide support and bolster the Australian Dollar, given the interconnected economic dynamics between China and Australia.

The US Dollar Index (DXY) surged as the US Treasury bond yield edged higher, with the 2 and 10-year Treasury yields reached at 4.73% and 4.36%, respectively on Thursday. Furthermore, the Greenback might have found support in economic data from the United States (US).

US Core Personal Consumption Expenditures Price Index (PCE) showed a year-on-year easing to 3.5% in October from the previous reading of 3.7%, aligning with expectations. The month-on-month Core PCE Price Index decreased to 0.2% from the prior 0.3%. Additionally, Initial Jobless Claims for the week ending November 24 totaled 218K, slightly below the anticipated 220K but higher than the revised previous figures of 211K (revised from 209K).

Daily Digest Market Movers: Australian Dollar gains ground on subdued US Dollar

• Australia's Private Capital Expenditure experienced a decline of 0.6% in Q3, contrasting with the previous growth of 2.8%. This contraction fell short of the expected rise of 1.0%.
• Aussie Monthly Consumer Price Index (CPI) for October shows a reading of 4.9%, a decrease from the previous reading of 5.6% in September and slightly below the expected 5.2%.
• Reserve Bank of Australia (RBA) Governor Michele Bullock highlighted that the current monetary policy is on the restrictive side, with rate hikes putting a damper on demand, particularly in the context of persistent services inflation.
• Governor Bullock emphasized the need for caution in employing high interest rates to combat inflation without inadvertently raising the unemployment rate.
• China's NBS Manufacturing PMI for November decreased to 49.4 from the previous reading of 49.5. The market expectation was for an increase to 49.7. The Non-Manufacturing PMI contracted to 50.2, falling short of the expected 51.1 and the previous reading of 50.6.
• US Gross Domestic Product Annualized increased by 5.2% during the third quarter from the previous reading of 4.9%, above the market consensus of 5.0.
• The latest Fed's Beige Book unveiled that the demand for labor has been "continuing to ease" over the weeks leading up to mid-November.

Technical Analysis: Australian Dollar maintains its position below the 0.6650 resistance level

The Australian Dollar trades higher around 0.6620 on Friday. The immediate hurdle appears to be the significant level at 0.6650, with November's high at 0.6676 following closely. If the pair successfully surpasses this level, it could pave the way for a test of the substantial resistance at the psychological mark of 0.6700, and beyond that, the August high at 0.6723. Conversely, on the downside, a critical support zone is situated around the psychological level of 0.6600, aligning with the seven-day Exponential Moving Average (EMA) at 0.6599. A clear breach below the EMA might lead the pair towards support near the 23.6% Fibonacci retracement level at 0.6580, followed by the major level at 0.6550.

AUD/USD: Daily Chart