AUD/USD: bears in control, but for how long?

AUD/USD is in a bearish trend having topped out at at 0.7731 and is printing a low of 0.7531

Despite the recent run of bad data from the US economy in manufacturing as well the ISM nonmanufacturing index falling below market expectations, declining over 4 points to 51.4 from 55.5.  The Beige Book also lacked a positive outlook, "Altogether, the data suggest that economic momentum slowed notably in August. The deceleration in economic activity can be clearly seen in our US monthly momentum indicator, which shows that economic activity likely expanded by only 0.8% after growing above 2% in the prior two months," explained analysts at Nomura, noting also that the Atlanta Fed's GDP forceasts had slipped.

Elsewhere, however, global yields have spiked sparking a sell-off in EM's and the Aussie, also underpinned by concerns that Central Banks are approaching an end to their easy monetary policies that ensued a sell-off in the S&P500 that fell 2.5% to a two-month low, with oil falling 4% and the US dollar outperformed.

AUD/USD levels

Valeria Bednarik, chief analyst at FXStreet explained that the daily chart shows that the price broke below a now bearish 20 SMA while technical indicators have turned sharply lower after failing to hold within positive territory, supporting a bearish extension. "In the shorter term, and according to the 4 hours chart, the price is at its Friday's low and well below its moving averages, while technical indicators stand within oversold readings, with no signs of changing bias, also in line with another leg lower."

While Westpac's 1 day for AUD/USD is bearish towards 0.7500, driven by global risk aversion, there are expectations for gains to 0.7800.

Market outlooks for the antipodeans: gains expected - Westpac