Australian Dollar appreciates after Trade Balance data, RBA Bullock’s speech awaited

• The Australian Dollar continues to face downward pressure following the release of Trade Balance data on Thursday.
• Australia’s Trade Balance posted a surplus of 6,009 million MoM in July, against the expected 5,150 million.
• The US Dollar received downward pressure following recent downbeat economic data.

The Australian Dollar (AUD) inches higher against the US Dollar (USD) following the release of the Trade Balance data on Thursday. Australia’s trade surplus widened to 6,009 million MoM in July, exceeding the expected 5,150 million and 5,589 million in the previous reading. Traders await Reserve Bank of Australia (RBA) Governor Michele Bullock’s speech later in the day.

The Australian Dollar received downward pressure as recent figures showed that Australia’s Gross Domestic Product (GDP) grew in the second quarter but fell short of the market expectations. A private survey also showed that the country’s manufacturing activity remained contractionary in August, extending the sector’s deterioration to two years.

The US Dollar depreciated after July's US JOLTS Job Openings came in below expectations, signaling a further slowdown in the labor market. Additionally, the ISM Manufacturing PMI showed that factory activity contracted for the fifth straight month.

Traders now await US ISM Services PMI and Initial Jobless Claims scheduled to be released on Thursday. Attention will shift to Friday’s US Nonfarm Payrolls (NFP) to gain more cues on the potential size of an expected rate cut by the Fed this month.

Daily Digest Market Movers: Australian Dollar appreciates due to widened trade surplus

• Atlanta Federal Reserve President Raphael Bostic said on Wednesday that the Fed is in a favorable position but added that they must not maintain a restrictive policy stance for too long, per Reuters. FXStreet’s FedTracker, which gauges the tone of Fed officials’ speeches on a dovish-to-hawkish scale from 0 to 10 using a custom AI model, rated Bostic’s words as neutral with a score of 4.6.
• US JOLTS Job Openings dropped to 7.673 million in July, down from 7.910 million in June, marking the lowest level since January 2021 and falling short of market expectations of 8.10 million.
• Bank of America (BoA) has revised its economic growth forecast for China, lowering its 2024 projection to 4.8% from the previous 5.0%. For 2025, the forecast is adjusted to 4.5% growth, while the 2026 outlook remains unchanged at 4.5%.
• China's Services Purchasing Managers' Index (PMI) fell from 52.1 in July to 51.6 in August, which is notable considering the close trade relationship between China and Australia.
• Australia’s Gross Domestic Product (GDP) posted a 0.2% reading QoQ for the second quarter, up from the previous quarter’s 0.1% but falling short of the expected 0.3% readings.
• The Judo Bank Composite PMI climbed to 51.7 in August, up from 51.4 in July, signaling the fastest expansion in three months. This growth was primarily fueled by a rise in services activity, with the Services PMI reaching 52.5 in August, up from 52.2 in July, marking the seventh consecutive month of growth in the services sector.
• The US ISM Manufacturing PMI inched up to 47.2 in August from 46.8 in July, falling short of market expectations of 47.5. This marks the 21st contraction in US factory activity over the past 22 months.

Technical Analysis: Australian Dollar holds ground above 0.6700

The Australian Dollar trades around 0.6720 on Thursday. Analyzing the daily chart, the AUD/USD pair is positioned below the nine-day Exponential Moving Average (EMA), suggesting a short-term bearish trend. However, the 14-day Relative Strength Index (RSI) has moved above the 50 level, suggesting that the asset price is leaning toward the bullish side.

On the downside, the AUD/USD pair could test the throwback level near 0.6575, with a deeper decline potentially aiming for the lower support around 0.6470.

In terms of resistance, the AUD/USD pair may first encounter the immediate barrier at the 14-day EMA around 0.6731, followed by the nine-day EMA at 0.6742. A break above these levels could pave the way for a test of the seven-month high at 0.6798.

AUD/USD: Daily Chart