Australian dollar appreciates as the Australian trade surplus expands in May.

The Australian Dollar (AUD) recovered its recent losses on Thursday. The AUDUSD pair surged following Australia’s Trade Balance report. Which increased to 6,548 million month on month in May, beating the predicted 5,500 million and April’s balance of 5,024 million. Australia’s imports fell 7.2% month on month in May. Reversing April’s 4.2% increase. Exports fell 2.5%, following a 0.6% drop the previous month.

The Australian Dollar may rise because Governor Michele Bullock of the Reserve Bank of Australia (RBA) issued a hawkish statement on Wednesday. Bullock stated that the central bank is prepared to raise interest rates if the Consumer Price Index (CPI) does not return to the 1%-3% target range. She also stated that the labor market is improving in a variety of ways, according to NCA NewsWire.

The US dollar is struggling as mixed data from Wednesday fuels Fed rate decrease predictions.

The US Dollar (USD) faltered after conflicting economic data was released in the United States (US). Fueling speculation of interest rate cuts by the US Federal Reserve (Fed). According to the CME FedWatch Tool, the probability of a Fed rate drop of at least 25 basis points has risen to roughly 70.0%, up from 47.5% a week ago.

The decline of US Treasury yields Putting pressure on the greenback. Investors are waiting for crucial US employment data releases on Friday. Such as average hourly earnings and nonfarm payrolls.

Daily Market Movers: Australian Dollar Rises on Improved Risk Sentiment.

On Wednesday, the ISM US Services PMI rose to 53.8 in May. The highest level in nine months and much beyond the forecast of 50.8. In contrast, the ADP US Employment Change report revealed that 152,000 new workers were added to payrolls in May, the lowest in four months and significantly lower than the projection of 175,000 and the downwardly revised total of 188,000 in April.
On Wednesday, Australia’s Gross Domestic Product (GDP) was revealed, with a 0.1% increase in the first quarter, compared to the predicted 0.2%. On a yearly The economy increased by 1.1%, little less than the predicted 1.2%.

Judo Bank Purchasing Managers Index (PMI) for May was 52.5, lower than the projected 53.1.

The Judo Bank Purchasing Managers Index (PMI) for May was 52.5, lower than the projected 53.1. Meanwhile, the Judo Bank Composite PMI fell slightly to 52.1 in May, from 53.0 in April. This demonstrates that Australia’s private sector output increased for the fourth consecutive month, but at a slower rate.
Caixin China Services PMI rose to 54.0 in May, exceeding estimates of 52.6 and the prior level of 52.5. This was the 17th consecutive month of growth in services activity, the strongest rate since July 2023. Because China and Australia are close trade partners, any changes in the Chinese economy may have an impact on the Australian market.
Last In an interview with Fox Business this week, Atlanta Fed President Raphael Bostic stated that he does not believe additional rate hikes are necessary to meet the Fed’s 2% annual inflation target. Furthermore, New York Fed President John Williams indicated that inflation is too high but should drop in the second half of 2024. According to Reuters, Williams does not believe there is an urgent need to intervene on monetary policy.