During the early Asian session on Wednesday, the AUD/USD pair gained momentum, trading around 0.6715. The Australian Dollar (AUD) found support from a positive Australian August Purchasing Managers Index (PMI), though traders are awaiting further cues from Australia’s second-quarter Gross Domestic Product (GDP) data, set to be released later today.
On Wednesday, data from Judo Bank and S&P Global revealed that Australia’s Services PMI rose to 52.5 in August, up from 52.2 in July and surpassing expectations. Additionally, the Composite PMI improved to 51.7, better than both forecasts and the previous reading of 51.4.
Investors are particularly focused on the Australian GDP growth figures, which are projected to show a 0.3% quarter-on-quarter increase for Q2 and a 1% year-over-year rise to June. A stronger-than-expected GDP result could boost the AUD, while a weaker performance might fuel speculation of an interest rate cut by the Reserve Bank of Australia (RBA), potentially weighing on the currency.
In contrast, the US ISM Manufacturing PMI showed the lowest reading since November, rising slightly to 47.2 in August from 46.8 in July but falling short of the 47.5 consensus. This weaker data has increased expectations for a Federal Reserve interest rate cut later this month, with traders now assigning a 39% chance to a more aggressive 50 basis points reduction, up from 31% prior to the report.
The upcoming US ISM Services PMI, scheduled for release on Thursday, is expected to ease to 51.4 in August from 51.1 in July. Attention will then shift to the US Nonfarm Payrolls (NFP) report for August, due on Friday, which could further influence market expectations and currency movements.
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