Australian dollar falls due to the sharp drop in the prices of oil, iron ore, and copper.

On Thursday, the Australian Dollar (AUD) fell for the ninth day in a row, owing mostly to lower oil, iron ore, and copper prices. Because Australia is a net exporter of energy and metals, its currency is especially vulnerable to variations in commodity prices.
The AUD was also under pressure from recent Purchasing Managers Index (PMI) data, which revealed that Australia’s economic activity dropped In July, it fell to its lowest level in six months. Manufacturing activity remained in decline, while growth in the services sector slowed.
The Aussie Dollar’s downside may be limited as the Reserve Bank of Australia (RBA) is expected to delay reducing policy tightening compared to other major central banks due to persistent inflationary pressures and a tight labour market. Futures markets now indicate a 20% chance that the RBA will raise interest rates at its August meeting.

The US dollar may struggle due to a drop in Treasury yields.

The AUDUSD pair was also pressured by a rising US Dollar (USD) as investors braced for upcoming US GDP and PCE inflation data. Recent US PMI data showed that private-sector activity increased at a quicker rate in July, illustrating the durability of US growth in the face of increasing interest rates. This data offers. If inflation does not show indications of dropping, the Federal Reserve (Fed) will have some flexibility to maintain its restrictive policy stance.

Traders are likely to closely monitor the US Gross Domestic Product (GDP) Annualized (Q2) figures on Thursday, with the market forecasting 2.0% growth in the second quarter, up from 1.4% in the previous quarter. Investors may acquire new insights regarding the US economy.

Daily Market Movers: Australian Dollar falls due to slowing corporate activity.

The S&P Global US Services PMI rose to 56.0 in July, the highest rating in 28 months, up from 55.3 in June and beyond market forecasts of 55.3. Meanwhile, the Composite PMI rose to 55.0 from the prior reading of 54.8, marking The reading is the highest since April 2022, suggesting consistent increase over the previous 18 months.
Sluggish economic activity in China has increased selling pressure on the Australian dollar. Concerns over China’s sluggish economy were heightened by the People’s Bank of China’s (PBoC) unexpected rate drop on Monday.

The PBOC cut the one-year MLF rate to 2.30% from 2.50% on Thursday.

The People’s Bank of China (PBOC) reduced the one-year Medium-term Lending Facility (MLF) rate from 2.50% to 2.30% on Thursday. Furthermore, the Bank of China, one of the world’s major banks, announced a 10-to-20 basis point reduction in time deposit rates. Because China and Australia are close trading partners, any changes in the Chinese economy could have an influence on Australian markets.
Australia’s Judo Bank Manufacturing PMI rose to 47.4 in July from 47.2 in June. Meanwhile, The Services PMI fell to 50.8 in July, from 51.2 in June. The Composite PMI also fell, down to 50.2 in July from 50.7 in June.
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President of the Federal Reserve Bank of New York, John Williams, remarked on Friday that the long-term trends that led to drops in neutral interest rates prior to the epidemic remain. remarked, “My own Holston-Laubach-Williams estimates for r-star in the United States, Canada, and the Euro area are about the same level as they were before the pandemic,” according to Bloomberg data.
Reuters quoted Sean Langcake, head of According to Oxford Economics Australia’s macroeconomic forecasting, “The current rate of employment growth suggests demand is resilient and cost pressures will persist.” We believe the RBA will maintain the course and leave interest rates on hold, but August is undoubtedly a live meeting.