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04/09/24
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AUD Weakens Amid Mixed Economic Data Release and China’s PMI Decline
The Australian Dollar is still showing weakness following the release of mixed economic data. Australia’s Gross Domestic Product (GDP) saw a marginal growth of 0.2% in the second quarter, a slight uptick from the previous quarter’s 0.1%. However, this result did not meet the anticipated 0.3% growth. Compounding the situation, China’s Services Purchasing Managers’ Index (PMI) also declined, dropping from 52.1 in July to 51.6 in August, reflecting ongoing economic uncertainties in both nations, given their close trading relationship.
Despite these factors, certain indicators, such as the Australian August PMI, offered some resilience to the Australian Dollar, limiting its daily losses against the US Dollar. Traders are looking ahead to an important address by the Governor of the Reserve Bank of Australia, which may provide further guidance on the central bank’s stance regarding interest rates and monetary policy.
On the US side, the dollar has found support amid ongoing assessments of economic conditions. The ISM Manufacturing PMI revealed a continued contraction in factory activity, marking the fifth month of decline. These results have sparked renewed concerns regarding the implications of high interest rates on the overall US economic landscape.
Looking ahead, key economic reports including the ISM Services PMI and Nonfarm Payrolls are expected to guide expectations for potential interest rate adjustments by the Federal Reserve. The Judo Bank Composite PMI for Australia improved to 51.7, indicating the fastest growth in three months, driven primarily by a rise in the services sector.
Meanwhile, Australia’s Private Capital Expenditure saw an unexpected decrease of 2.2%, a reversal from the previous quarter’s growth and below market expectations. This marks the first drop in new capital expenditures since the latter part of 2023. The Australian Dollar now hovers around the 0.6700 level against the US Dollar, facing potential challenges moving forward.
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