- Even with positive domestic S&P PMI data, the Australian dollar faces pressure.
- China’s Caixin Services PMI rose unexpectedly to 52.6 in July, compared to the forecasted 50.2.
- Governor Adriana Kugler’s resignation offered Trump an earlier chance to sway the central bank’s direction.
The Australian Dollar (AUD) is experiencing a downturn for the second consecutive day, despite encouraging S&P Purchasing Managers’ Index (PMI) data from Tuesday. The AUD/USD pair is declining as the US dollar (USD) remains steady amid shifting expectations regarding global trade and monetary policy.
The S&P Global Australia Composite PMI went up from 51.6 in June to 53.8 in July, highlighting a monthly increase in business activities that hasn’t been seen since April 2022, showcasing the most robust growth in the private sector.
Meanwhile, the Caixin Services PMI in China rose sharply from 50.6 in June to 52.6 in July, against market predictions of 50.2 for the same period.
The Reserve Bank of Australia (RBA) is set to propose a 25 basis points reduction next week, which would lower cash rates to 3.60%. Easing measures have gained momentum since June as core inflation cooled to 2.7%, fitting within the RBA’s target of 2-3%, accompanied by a decrease in unemployment and wage growth.
The Australian Dollar struggles while the US dollar remains steady ahead of ISM Service PMI
- The US Dollar Index (DXY), which gauges the dollar’s value against six major currencies, has risen for the second day, trading around 98.80. The US ISM Service PMI will be in focus later this North American session.
- U.S. Federal Reserve Governor Adriana Kugler’s sudden resignation has raised concerns about the independence of the Fed.
- The Trump administration has dismissed Labor Statistics Bureau (BLS) committee member Erica Mantelfer following a disappointing employment report, which seems part of a broader strategy to cast doubt on the authenticity of inflation data and may influence market and Fed policy discussions.
- In the U.S., non-farm payrolls (NFP) increased by 73,000, noticeably lower than the revised figure of 14,000 for June (which was adjusted from 147,000). This also falls short of the expected increase of 110,000. Additionally, the unemployment rate ticked up to 4.2% in July from 4.1% in June.
- President Trump signed an executive order on Thursday imposing tariffs ranging from 10% to 41%, expected to take effect on August 1, impacting imports from various countries, including Canada, India, and Taiwan, which did not meet trade contract deadlines, according to Reuters.
- The Federal Reserve announced in their widely anticipated July meeting that they would maintain the federal funding rate in the range of 4.25%-4.5%. Chairman Jerome Powell stated that the Fed has not yet determined potential policy changes for September and will need time to gauge the impact of tariffs on consumer prices.
- U.S. and China discussions failed to extend the 90-day tariff suspension during recent talks in Stockholm, Sweden. The current suspension is set to end on August 12, with final decisions resting with President Trump. Meanwhile, U.S. tariffs decreased from 145% to 30%, and China’s tariffs lowered from 125% to 10%.
- The TD-MI inflation measure saw a 0.9% monthly increase in July, following its largest rise since December 2023, building on a modest 0.1% increase in June. Annual inflation was noted at 2.4%. This monthly growth adds to the RBA’s concerns amid ongoing supply chain uncertainties and fluctuating consumer demand.
- Australia avoided the recent tariff increases from the U.S., with President Trump maintaining a baseline tariff of 10% on Australian goods. Additionally, the disappointing U.S. employment figures have led to market reactions concerning potential interest rate reductions by the Federal Reserve.
The Australian Dollar remains stable near 0.6450 against a persistent bearish outlook
The AUD/USD pair is trading near 0.6470 on Tuesday. Daily chart analyses reflect a bearish sentiment, with the 14-day relative strength index (RSI) hovering below the 50 mark. The pair is also positioned under the nine-day exponential moving average (EMA), indicating a weakening short-term momentum.
Looking at the downside, primary support is situated at a two-month low of 0.6419 hit on August 1. A drop below this could put additional pressure on the AUD/USD pair, targeting a three-month low at 0.6372 reached on June 23.
The AUD/USD pair may potentially reach an initial resistance level of 0.6485 aligned with the nine-day EMA and 0.6494 marked by the 50-day EMA. A breakthrough above these could bolster short- and medium-term momentum, pushing the pair toward the nine-month high of 0.6625.
AUD/USD: Daily Charts
Australian dollar prices today
The advancements in the Australian Dollar (AUD) against major currencies are reflected in the table below. It shows the currency’s performance, notably indicating it is weakest when compared to the Japanese yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.11% | 0.02% | 0.04% | 0.07% | 0.19% | 0.30% | 0.24% | |
| EUR | -0.11% | -0.10% | -0.03% | -0.03% | -0.01% | 0.12% | 0.12% | |
| GBP | -0.02% | 0.10% | 0.02% | 0.06% | 0.10% | 0.22% | 0.10% | |
| JPY | -0.04% | 0.03% | -0.02% | 0.02% | 0.22% | 0.23% | 0.17% | |
| CAD | -0.07% | 0.03% | -0.06% | -0.02% | 0.06% | 0.16% | 0.04% | |
| AUD | -0.19% | 0.00% | -0.10% | -0.22% | -0.06% | 0.17% | 0.00% | |
| NZD | -0.30% | -0.12% | -0.22% | -0.23% | -0.16% | -0.17% | -0.06% | |
| CHF | -0.24% | -0.12% | -0.10% | -0.17% | -0.04% | -0.01% | 0.06% |
The heatmap illustrates the exchange rate changes among major currencies. The base currency is specified in the left column, while the estimated currency is indicated in the top row. So, if you look at the Australian dollar against the US dollar, the figure provided denotes the rate of AUD (base) to USD (quoted).
