Australian dollar edged higher amid better risk appetite, with the US PMI eyed.

The Australian Dollar (AUD) ends its three-day losing run on Thursday, presumably due to an improved risk appetite. However, the Australian dollar came under pressure. After the Melbourne Institute released its Consumer Inflation Expectation report. Consumer estimates for projected inflation over the next 12 months decreased to 4.1% in May, down from 4.6% in April, the lowest since October 2021.

Australian Private Sector activity increased for the fourth consecutive month in May. The preliminary Judo Bank Composite Purchasing Managers Index (PMI) fell to 52.6 in May from 53.0 in April. Indicating a small slowdown in expansion. The growth was mostly driven by an expansion in the services sector. While the loss in industrial production moderated.

FOMC Minutes indicated a lack of progress on inflation, casting doubt on the Fed’s ability to proceed with rate decreases.

The US dollar (USD) remains strong after recent advances. As the minutes from the most recent Federal Open Market Committee (FOMC) policy meeting were issued on Wednesday. Policymakers of the Federal Reserve (Fed) voiced concern about the lack of progress on inflation. Which proved to be more persistent than predicted at the start of 2024. As a result, the Federal Reserve is hesitant to decrease interest rates.

Daily Market Movers: Australian Dollar creeps higher due to risk-taking mentality.

In May, the Judo Bank Australia Services PMI was 53.1, down from 53.6 in the previous month. This is the fourth straight month of expansion. Albeit at a slower but still steady pace. The Manufacturing PMI stayed constant at 49.6 in May, suggesting. That manufacturing conditions deteriorated for the fourth straight month.
The ASX 200 Index fell below 7,800 on Thursday, primarily to falls in mining and energy firms following a major drop in commodity prices. Furthermore, Australian equities were influenced by a poor performance on Wall Street overnight, when FOMC meeting minutes raised concerns about the slow pace on inflation.
According to the CME FedWatch Tool, the probability that the Federal Reserve will implement The 25 basis-point rate drop in September has been somewhat reduced to 50.7%, down from 51.6% the day before.
Susan Collins, President of the Federal Reserve Bank of Boston, spoke on Tuesday at an event titled “Central Banking in the Post-Pandemic Financial System”. Collins noted that progress toward interest rate adjustments will take longer and highlighted that patience is the best strategy for the Fed, according to Reuters. Fed Governor Christopher Waller remarked that he needs several more months of positive inflation data before he can support a policy easing.
Minutes from the RBA’s May 2024 meeting revealed that the board contemplated hiking interest rates but eventually determined that the rationale for keeping a stable policy was stronger. Policymakers concurred that it was It is difficult to predict or rule out future cash rate fluctuations. They emphasized that the flow of data increased the danger of inflation continuing above goal for an extended length of time.