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(M2) Correction Extends


Late Session Rebound


(M2) Corrective Cycle Remains In Play


(M2) Gains Still Considered Corrective

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PMI Slips


A weaker greenback saw AUD/USD rise on Thursday, the pair topping out at 0.7781, last trades down 3 pips at 0.7774. AUD could come under pressure with iron ore lower again, in Singapore the futures price is back below $200/ton and is on track for the third straight session of losses.

  • From a technical perspective AUD/USD remains within its recent range. A bearish theme dominates, following last week's move lower to 0.7688 on May 13. A firm support zone has been defined at 0.7688-75, the latter is the May 4 low. Clearance of this zone would strengthen a bearish case and signal scope for a deeper pullback towards 0.7586, the Apr 13 low. Initial firm resistance is at 0.7813, May 18 high ahead of the key resistance at 0.7891, May 10 high.
  • Data from Markit earlier showed preliminary May composite PMI fell to 58.1 from 58.9 previously. The decline was driven by services which saw a decline to 58.2 from 58.9 previously, while manufacturing rose to 59.9 from 59.7. Jingyi Pan, Economics Associate Director at IHS Markit, said: "Australia's private sector growth eased from April's survey record. That said, growth remained sharp to affirm the continued improvement in economic conditions following the easing of COVID-19 restrictions. "Export orders notably continued to improve, reflecting the robust external demand despite concerns of rising COVID-19 cases in the region. In turn, this filtered through to the labour market with employment improving at the fastest pace in the survey's five-year history"
  • Fig.1: Austrlia GDP & Composite Output Index

Source: Markit

  • Also on the docket today is preliminary April retail sales, the M/M figure is expected to rise 0.5% after a 1.3% rise last time out.

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