Home Forex AUD/USD remains sideways above 0.6600 despite overall improvement in Aussie PMI data

AUD/USD remains sideways above 0.6600 despite overall improvement in Aussie PMI data

by SuperiorInvest
  • AUD/USD remained subdued despite Aussie PMI data release.
  • Manufacturing PMI came in at 53.9 versus estimates of 54.0, while Services PMI landed at 50.4 versus 47.7.
  • DXY could witness loss of momentum ahead of US PMI numbers.

AUD/USD pair did not respond effectively to the release of Australia’s S&P Global PMI data. The asset continued to trade sideways around 0.6640. Earlier, the major rebounded strongly after picking out significant bids below 0.6580.

Australia’s S&P Manufacturing PMI landed at 53.9, amid expectations of 54.0 and the previous version of 53.8. While the services PMI remained upbeat, it was released at 50.4, significantly higher than forecasts of 47.7 and the earlier release of 50.2.

More broadly, Australian bulls remained in the grip of bears following the publication of less hawkish minutes by the Reserve Bank of Australia (RBA). RBA Governor Philip Lowe and his peers also considered a 25 basis point (bps) rate hike alternative.

This suggests that the central bank is not aggressive in raising its official cash rate (OCR). There is no doubt that price pressures are also high in the Antipodean region, but the central bank is not prepared to sacrifice growth rates for inflation. Furthermore, the reason for the 25 basis point rate discussion could be that conducting monetary policy every month gives the central bank enough chances to raise interest rates.

Meanwhile, the US Dollar Index (DXY) is expected to show some signs of losing upside momentum. DXY printed a fresh two-decade high of 111.80 on Thursday after the Federal Reserve’s (Fed) tone on interest rate guidance was tougher than expected. The DXY could witness a long liquidation as the US PMI is expected to show a mixed performance.

The manufacturing PMI is seen lower at 51.1 from the previous version of 51.5. While the services PMI improves to 45.0 from the previous print of 43.7.

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