The recent dollar storm is taking its toll on the Australian dollar. AUD/USD fell to a new low of 0.8616 before it bounced back, but just a bit. It remains far from the previous lows.
The pair previously hung above the double bottom of 0.8660 and made false dips below this line. Is this yet another false break? Or is the Aussie catching up and has more room to fall?
Here are 3 reasons for the fall:
- USD storm: After a correction, the US dollar resumed its strength, gaining against the weak yen but the Japanese currency was not alone.
- Weak Chinese services PMI: the HSBC services PMI dropped to 52.9 points, weaker than last month’s 53.5 points. While manufacturing is more important for Australia’s No,. 1 trading partner, this added weight on the Aussie.
- Falling commodity prices.Together with falling oil prices, also prices of copper and iron ore have been under pressure.
Earlier in the week, the RBA did not rock the boat and didn’t offer anything new.
More: AUD/USD vulnerable to breakdowns – Elliott Wave Analysis. Here is how it looks on the chart:
