AUD/USD marks a new 10-month low

• The AUD/USD pair marks a fresh 10-month low due to US dollar resistance.
• Equities are expected to rise as US markets open after a long weekend.
• The IMF’s Gopinath warned that external conditions had become more difficult for emerging markets due to tightening financial conditions.

The AUD/USD pair updates a 10-month low near 0.6360 ahead of the US session open. The AUD witnessed a huge sell-off after the Reserve Bank of Australia (RBA) held interest rates unchanged at 4.10%. RBA policymakers left the door open for further monetary policy tightening, warning that inflation remains too high and will remain so for some time.

The S&P 500 is expected to open negative, factoring in bearish signals from futures overnight. Bullish action is expected in US stocks as US markets open after a long weekend. On Monday, US markets were closed for Labor Day. The market tone is negative as investors worry about global growth knowing that Western central banks will keep interest rates higher for longer.

IMF First Deputy Managing Director Gita Gopinath warned that external conditions had become more difficult for emerging markets due to increasing geopolitical fragmentation, tightening financial conditions and the rising costs of climate change.

Global market sentiment turned bearish after the August Caixin Manufacturing PMI fell significantly to 51.8 from the previous release of 54.1.

The US Dollar Index (DXY) faces nominal selling pressure after printing a fresh five-month high near 104.84 as global economic activities remain bearish, under pressure from aggressive central bank tightening .

Looking ahead, the dollar will dance to the tune of the August ISM services PMI. The PMI data is expected to remain broadly unchanged at 52.7.

As for the Australian dollar, investors will be closely watching the GDP data for the second quarter. According to expectations, the Australian economy grew at a rate of 0.3% compared to 0.2% registered in the first quarter. In annualized terms, Australian GDP is forecast to grow at a slower pace of 1.7%, down from 2.3% previously.