Australian Dollar declines after recent gains eyes on US labor Data.
On Thursday, the Australian Dollar (AUD) will have difficulties in its attempt to end its losing streak. Risk-off sentiment and a generally gloomy session in the commodities complex are pushing the AUDUSD pair lower. There is additional pressure on the Australian dollar (AUD) because to the worse Judo Bank Purchasing Managers Index (PMI) data. Additionally, the enhanced Chinese services Data might prevent the AUD from losing too much. In December, the Caixin Services PMI increased to 52.9, above the 51.6 predicted and 51.5 previous.
Australian Services and Composite PMI fell to 47.1 and 46.9, respectively.
According to the most recent Judo Bank Services PMI, Australia’s services sector shrank in December. The index recorded a reading of 47.1, which was below the market’s forecast of a steady 47.6. Additionally, from a prior value of 47.4, the Composite PMI dropped to 46.9. This is the Services contraction’s fastest rate since the third quarter of 2021.
According to Judo Bank economist Matthew De Pasquale, recent data from the last two months show that although the Australian economy is slowing down, it is not speeding up. Although households continue to face difficulties as a result of high interest rates, the output and new order indexes continue to remain at levels consistent with the soft landing scenario that the Reserve Bank of Australia (RBA) has projected.
Better US Treasury yields appear to be supporting the US Dollar Index (DXY), which is still trending upward. The improved ISM Manufacturing PMI survey, which increased to 47.4 in December from the previous reading of 46.7 and beyond the market consensus of 47.1, may further lend support to the upward momentum. Nonetheless, JOLTS Job Openings decreased to 8.79 million in November, below the projected amount of 8.85 million. Traders watch for US job market data releases such as Initial Jobless Claims and ADP Employment Change.
The Federal Open Market Committee’s (FOMC) December minutes indicate that attendees believe that the policy rate has either reached or is almost at its peak in the current cycle of tightening. They did, however, stress that the policy’s precise course will depend on how the economy developed.
Daily Market Movers: The risk-off attitude is posing issues for the Australian dollar.
Australia’s Judo Bank Manufacturing PMI, which dropped from 47.8 in November to 47.6 in December, suggested a little decrease in manufacturing activity.
The demand for domestic travel has declined, according to RBA internal documents. Furthermore, because of difficulties related to the cost of living, consumers are either cutting back on purchases or switching to more reasonably priced goods. Nonetheless, it appears from the documents that pay growth in the private sector has leveled out at about 4.0%.
Anthony Albanese, the prime minister of Australia, declared he has directed Treasury and Finance should investigate ways to reduce the cost of living expenses for families without putting further pressure on inflation.
Geopolitical tensions in the area may rise as a result of China characterizing the presidential and parliamentary elections on January 13 as a choice between war and peace. A top Chinese official has appealed to the people of Taiwan to make the “right decision,” raising possible red flags over the results of the election.
The December report of China’s NBS Manufacturing PMI dropped from 49.4 to 49.0 points. The market anticipated a rise to 49.5. Although the NBS Non-Manufacturing PMI was not as high as projected (50.5), it did rise to 50.4 from 50.2 previously.
The Manufacturing Employment Index for the US increased to From 45.8 in November to 48.1 in December.
The US S&P Global Manufacturing PMI deviated from the projected consistency at 48.2 points, posting a lower-than-expected number of 47.9.
