- The Australian Dollar lost ground as Manufacturing PMI dropped for the fifth consecutive month to 47.2 in June.
- The AUD may limit its downside due to the higher-than-expected Manufacturing PMI from trade partner China.
- The US Dollar declines as recent inflation data raises the odds of the Fed’s rate cuts in 2024.
The Australian Dollar (AUD) may limit its downside as the Caixin Manufacturing PMI from China increased to 51.8 in June, defying the expectations of a decline to 51.2 from May’s 51.7. Any change in the Chinese economy could impact the Australian market as both nations are close trade partners.
The AUD received pressure as investors’ sentiment soured following data indicating that Australia's June manufacturing PMI contracted at its fastest rate since May 2020. Market focus now turns to the Reserve Bank of Australia's (RBA) upcoming policy meeting minutes on Tuesday for insights into the monetary policy direction.
The US Dollar (USD) depreciates due to the heightened expectations of the US Federal Reserve’s (Fed) deducting interest rates in 2024. The CME FedWatch Tool indicates that the likelihood of a Fed rate cut in December by 25 basis points has increased to nearly 32.0%, up from 28.7% a week earlier.
Daily Digest Market Movers: Australian Dollar holds ground after stronger China’s PMI
- The Judo Bank Australia Manufacturing PMI dropped for the fifth consecutive month to 47.2 in June from 49.7 in May. This decline is the fastest deterioration since May 2020.
- Australia’s 10-year government bond yield surged above 4.4%, as a hot inflation reading fueled fears that the Reserve Bank of Australia might raise interest rates again in the next meeting in August.
- Chinese President Xi Jinping, as reported by Chinese state media on Monday, emphasized that fostering a healthy and stable development of China-Australia relations serves the fundamental and long-term interests of both countries and their peoples. Xi expressed readiness to collaborate with Australia in advancing toward a more mature, stable, and productive comprehensive strategic partnership between the two nations.
- NBS China’s Manufacturing PMI remained at 49.5 in June, consistent with market forecasts and marking the second consecutive month at this level. This result indicates the fourth instance of contraction. Meanwhile, the Non-Manufacturing PMI fell to 50.5 from the previous reading of 51.1, below market expectations of 51.0. Despite marking the 18th consecutive month of expansion in the service sector, this is the slowest growth rate since last December.
- On Friday, the US Bureau of Economic Analysis reported that US inflation eased to its lowest annual rate in over three years. The US Personal Consumption Expenditures (PCE) Price Index increased by 2.6% year-over-year in May, down from 2.7% in April, meeting market expectations. Core PCE inflation also rose by 2.6% year-over-year in May, down from 2.8% in April, aligning with estimates.
- The Reserve Bank of Australia’s (RBA) Deputy Governor Andrew Hauser. Hauser said it would be a “bad mistake” to formulate policy in response to a single inflation report. He emphasized that there is still a suite of economic data to come that will require detailed analysis, per Bloomberg.
- Last week, the Australian Bureau of Statistics showed that the monthly Consumer Price Index (CPI) increased by 4.0% in the year to May 2024, up from 3.6% in April and exceeding market forecasts of 3.8%. This marks the highest level since November 2023.
Technical Analysis: Australian Dollar edges lower toward 0.6650
The Australian Dollar trades around 0.6670 on Monday. The daily chart analysis indicates a neutral bias for the AUD/USD pair as it consolidates within a rectangle formation. The 14-day Relative Strength Index (RSI) is positioned slightly above the 50 level, suggesting a potential for bullish bias.
The AUD/USD pair may encounter resistance near the upper boundary of the rectangle formation around 0.6690, followed by the psychological level of 0.6700. Additional resistance is seen at 0.6714, the highest level since January.
On the downside, the AUD/USD pair finds support around the 50-day Exponential Moving Average (EMA) at 0.6621. A break below this level could lead the pair to test the lower boundary of the rectangle formation near 0.6585.
AUD/USD: Daily Chart
Australian Dollar PRICE Today
The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the weakest against the New Zealand Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.37% | -0.09% | 0.18% | 0.01% | 0.02% | -0.05% | 0.17% | |
| EUR | 0.37% | 0.05% | 0.24% | 0.07% | 0.27% | -0.01% | 0.22% | |
| GBP | 0.09% | -0.05% | 0.16% | 0.03% | 0.22% | -0.06% | 0.17% | |
| JPY | -0.18% | -0.24% | -0.16% | -0.16% | -0.09% | -0.24% | 0.01% | |
| CAD | -0.01% | -0.07% | -0.03% | 0.16% | 0.05% | -0.08% | 0.15% | |
| AUD | -0.02% | -0.27% | -0.22% | 0.09% | -0.05% | -0.27% | 0.04% | |
| NZD | 0.05% | 0.00% | 0.06% | 0.24% | 0.08% | 0.27% | 0.25% | |
| CHF | -0.17% | -0.22% | -0.17% | -0.01% | -0.15% | -0.04% | -0.25% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).
Economic Indicator
RBA Meeting Minutes
The minutes of the Reserve Bank of Australia meetings are published two weeks after the interest rate decision. The minutes give a full account of the policy discussion, including differences of view. They also record the votes of the individual members of the Committee. Generally speaking, if the RBA is hawkish about the inflationary outlook for the economy, then the markets see a higher possibility of a rate increase, and that is positive for the AUD.
Read more.Next release: Tue Jul 02, 2024 01:30
Frequency: Weekly
Consensus: -
Previous: -
Source: Reserve Bank of Australia
The Reserve Bank of Australia (RBA) publishes the minutes of its monetary policy meeting two weeks after the interest rate decision is announced. It provides a detailed record of the discussions held between the RBA’s board members on monetary policy and economic conditions that influenced their decision on adjusting interest rates and/or bond buys, significantly impacting the AUD. The minutes also reveal considerations on international economic developments and the exchange rate value.
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