AUD/USD slides below 0.6700 as downbeat Aussie PMIs join banking fears, Fed concerns

AUD/USD prints the first daily loss in three around 0.6670 while bracing for the weekly loss during early Friday. In doing so, the Aussie pair justifies its risk barometer status, as well as downbeat activity data at home.

Earlier in the day, preliminary readings of Australia’s S&P Global PMIs for March dropped into the contraction figure of under 50.00 while slipping beneath the market forecasts and prior readings. That said, the Manufacturing gauge slid to 48.7 versus 50.3 expected and 50.7 prior while Services PMI declined to 48.2 from 50.7 previous readings and 49.7 market forecasts. With this, the Composite PMI dropped to 48.1 compared to 50.6 prior.

Elsewhere, the fears of a ballooning Fed balance sheet renew hawkish calls for the US central banks and join the global banking turmoil to weigh on the sentiment and allow the US Dollar to lick its wounds near the seven-week low. That said, the US Dollar Index (DXY) stays defensive near 102.60 after bouncing off a seven-week low the previous day but the US 10-year and two-year Treasury bond yields remain depressed around 3.39% and 3.80% respectively by the press time. While portraying the mood, the S&P 500 Futures struggle to copy Wall Street’s positive moves.

Apart from the Fed bets, comments from US Treasury Secretary Janet Yellen and Chair of the Basel Committee on Banking Supervision also weigh on the market’s mood and favor the AUD/USD sellers.

On Thursday, US Treasury Secretary Janet Yellen said, “China and Russia may want to develop an alternative to the US dollar,” while also showing preparedness for additional deposit actions `if warranted'. On the other hand, the Financial Times (FT) said that the head of the world’s top financial regulator, Pablo Hernández de Cos, has called for tighter rules to clamp down on risks spreading from so-called “shadow banks” to other parts of the banking system.

Talking about the data, the US Chicago Fed National Activity Index (CFNAI) dropped to -0.19 in February versus 0.0 expected and 0.23 prior. Further, Weekly Initial Jobless Claims declined to 191K for the week ended on March 18, versus 192K prior and 203K market forecasts. It should be noted that the US New Home Sales rose 1.1% in February from 1.8% prior, versus 1.6% analysts’ estimation, whereas Kansas Fed Manufacturing Index for March rose to 3.0 from -9.0 prior and 6.0 expected.

To sum up, AUD/USD justifies the market’s lack of clarity, as well as a cautious mood ahead of a busy calendar.

Also read: S&P Global PMIs Preview: EU and US figures to shed light on economic progress

Technical analysis

A daily closing below a two-wee-old ascending support line, around 0.6655 by the press time, becomes necessary for the AUD/USD bears to keep the reins.