Australian dollar under pressure ahead of concerns about china Deteriorating economy.

The Australian Dollar (AUD) fell against the US Dollar (USD) on Tuesday due to mounting concerns about the health of China’s economy. Analysts note that the most recent set of dismal economic statistics signals major hurdles for the world’s second-largest economy. China is a vital trading partner for Australia, therefore variations in China’s economic health can have a considerable impact on the Australian Market.

Goldman Sachs and Citi economists have cut their projections for China’s GDP growth in 2024 to 4.7%, falling shy of Beijing’s aim of 5.0%. SocGen refers to the scenario as a “downward spiral,” while Barclays labels it “from bad to worse” and a “vicious cycle.” Morgan Stanley also warns that “things could get worse before they get better,” according to Reuters.

The Aussie Dollar’s downside may be limited due to hawkish sentiment surrounding the Reserve Bank of Australia’s policy outlook.

The AUDUSD pair’s downside may be limited, as the Australian Dollar supported by the Reserve Bank of Australia’s (RBA) aggressive policy.

The US dollar is struggling due to rising possibilities of an aggressive Federal Reserve interest rate drop on Wednesday.

Meanwhile, the US dollar is under pressure as expectations rise for an aggressive 50 basis point Fed rate drop on Wednesday.

According to the CME FedWatch Tool, markets price in a 38.0% possibility of a 25 basis point Federal Reserve at the September meeting, the probability of a 50 basis point cut increased to 62.0%, up from 50.0% just a day earlier. This move implies heightened expectations for more aggressive monetary easing.

Daily Digest Market Movers: Australian Dollar Maintains Position Ahead of Fed Interest Rate Decision.

ANZ – Roy Morgan Consumer confidence rose 1.8 points to an eight-week high of 84.1. While ANZ adds that the rise broad-based, confidence remained negative.
The University of Michigan’s Consumer Sentiment Index increased to 69.0 in September, beating market estimates of 68.0 and setting a four-month high. This increase represents a steady recovery in consumers’ views of the US economy following months of falling economic expectations.
China’s economy weakened In August, industrial activity continued to decline and real estate values fell, putting pressure on Beijing to increase spending to support demand. According to Business Standard, the National Bureau of Statistics published this on Saturday.
China’s retail sales increased by 2.1% year on year in August, slipping from 2.7% the previous month and falling short of the market consensus of 2.5%.
The US Producer Price Index (PPI) increased by 0.2% month on month in August, beating the expected 0.1% increase and the prior 0.0%. Meanwhile, core PPI increased by 0.3% month on month, above the predicted 0.2% increase and the 0.2% fall in July.

Consumer inflation expectations in Australia fell to 4.4% in September, a modest decrease from August’s four-month high of 4.5%.

Consumer inflation expectations in Australia fell to 4.4% in September, a modest decrease from August’s four-month high of 4.5%. This drop demonstrates the central bank’s Efforts to strike a compromise between reducing inflation in a reasonable timeline and sustaining labor-market gains.
The Reserve Bank of Australia (RBA) maintained its hawkish position. With RBA Governor Michele Bullock declaring. That rate decreases are premature given to persistently high inflation. RBA Assistant Governor Sarah Hunter also stated that, while the labor market is tight, wage growth looks to have peaked and would likely decrease further.

https://voiceoftraders.com/analysis/usdjpy-falls-below-140-00-for-the-first-time-this-year