Aussie Falls As Australia PMI Slows

(RTTNews) - The Australian dollar weakened against other major currencies in the European session on Wednesday, following the disappointing release of flash PMIs, which revealed a slowdown in services activity and a contraction in the manufacturing sector.

Data from S&P Global showed that the Australia's private sector grew at the slowest pace in three months in September. The composite output index dropped to 50.8 from 52.7 in August. However, a reading above 50.0 indicates expansion.

The survey showed that the private sector output expanded for a fourth successive month, but the upturn was the weakest seen across the third quarter.

The services Purchasing Managers' Index fell to 51.4 from 53.2 in the previous month. At 49.3, the manufacturing PMI was down from 52.0.

The market's expectations of a follow-through action by the Reserve Bank of Australia (RBA) following the anticipated 25 basis point (bps) rate hike next week appear to have been muted by the lower data. This puts more downward pressure on the AUD/USD pair in addition to the current purchasing activity in US dollars (USD).

However, before the important Trump-Xi meeting and the release of the Australian employment report on Thursday, traders might hold off on making large wagers.

Brent crude futures slipped toward $98 a barrel, extending losses for a sixth consecutive session on hopes for progress in U.S.-Iran talks.

Media reports suggest that Saudi Arabia has restarted its East-West oil pipeline and may have resumed exports from the Red Sea port of Yanbu following drone attacks on September 11.

U.S. President Trump said officials held a "very productive" meeting with Iranian envoys but warned of dire consequences if no deal is reached.

Investors keep a close eye on developments between the U.S. and Iran and look forward to a crucial U.S.-China summit on Thursday, which could lead to new trade agreements amid escalating competition and restrictions on advanced technologies.

Meanwhile, U.S. President Donald Trump has expressed support for a possible ban on diesel exports to address the issue of escalating energy costs, sparking debate among U.S. officials and energy experts about economic and global impacts.

In the European trading today, the Australian dollar fell to a 1-week low of 0.7082 against the U.S. dollar, from an early high of 0.7117. The aussie may test support near the 0.69 region.

Against the yen and the euro, the aussie slid to 111.75 and 1.6130 from early highs of 112.15 and 1.6083, respectively. If the aussie extends its downtrend, it is likely to find support around 109.00 against the yen and 1.63 against the euro.

Against the Canada and the New Zealand dollars, the aussie edged down to 0.9977 and 1.2422 from early highs of 1.0012 and 1.2458, respectively. The next possible downside target for the kiwi is seen around 0.99 against the loonie and 1.21 against the kiwi.

Looking ahead, U.S. MBA weekly mortgage approvals data, U.S. S&P Global PMI for September, U.S. EIA crude oil data are slated for release in the New York session.