AUD/USD declines even in the face of enhanced Australian preliminary S&P Global PMI data. Australia’s preliminary June Manufacturing PMI increased to 51.2, whereas the Services PMI edged up to 49.9, indicating a trend towards economic stabilisation. The US Dollar maintains its position in the context of a hawkish sentiment regarding the Federal Reserve’s policy outlook. AUD/USD continues its downward trajectory for the sixth consecutive day, currently hovering around 0.6980 during the Asian trading session on Tuesday. The pair remains subdued despite the release of improved preliminary Australian S&P Global Purchasing Managers Index data. Traders are now focusing on the upcoming domestic inflation and employment data set to be released later this week.
S&P Global reported on Tuesday that the preliminary reading of Australia’s S&P Global Manufacturing PMI increased to 51.2 in June, compared to 50.7 in the previous month. Meanwhile, the Services PMI increased to 49.9 in June from the earlier figure of 48.7, while the Composite PMI rose to 49.8 in June compared to the previous reading of 48.7. The AUD/USD pair declines as the US Dollar strengthens amid a hawkish sentiment regarding the Federal Reserve policy outlook. The updated economic projections and commentary from Kevin Warsh, presiding over his first meeting as Fed Chair, surprised the market by adopting a more hawkish stance than expected.
Consequently, futures traders have completely incorporated a 25-basis-point rate increase for the September meeting, with a fraction also factoring in a slight chance of a tightening action as soon as next month. However, the Greenback may encounter challenges as risk aversion diminishes, a development linked to the ongoing peace talks between the US and Iran, which have contributed to alleviating inflation concerns. As reported on Tuesday that US Vice President JD Vance acknowledged that negotiations have made “great progress,” despite some underlying friction.