Australian dollar encountered difficulties as investors flocked back to the US dollar.
In the face of a weak US dollar (USD), the Australian Dollar (AUD) struggles to hold above a significant mark at 0.6750 on Wednesday. Due to signs of slowing global growth, the commodity-linked Aussie Dollar (AUD) is under pressure to decline. the end of 2024. Leading investors to revert to the US dollar. Market participants, however, are already reassessing their bold wagers on the Federal Reserve’s (Fed) impending rate decreases anytime soon. But the good surprise in China’s manufacturing figures may have helped to contain the AUD’s losses.
RBA’s decision to tighten policy will be heavily influenced by Australian economic statistics.
The Reserve Bank of Australia (RBA) has highlighted the importance of carefully. Examining supplementary data to evaluate risk balance prior to making decisions on future interest rates. Therefore Australia’s economic statistics will be crucial. The Judo Bank Manufacturing PMI. Which was released on Tuesday, suggested that economic activity had slowed down. It is expected that the Composite and Services PMI figures, which will be released on Friday, will fall below the 50 reading. And indicate a possible decline in these industries.
The Australian dollar may continue to show strength due to ongoing inflation and rising housing costs. The market anticipates that the RBA will not tighten monetary policy. At its upcoming meeting in February, which might support the stability of the AUD.
RBA internal documents which Bloomberg reported emphasize how rising interest rates affect both individuals and companies. According to the records, domestic tourism demand has declined from historically high levels. Which could be attributed to rising borrowing costs.
Furthermore, because of difficulties related to the cost of living. Consumers are either cutting back on purchases or switching to more reasonably priced goods. Positively, the documents offer a glimpse of the economic fundamentals. Indicating that private sector pay growth has steadied at about 4.0%.inside Australia. Furthermore, Australian Prime Minister Anthony Albanese declared at a news conference. That he has instructed Treasury and Finance to investigate ways to lessen the financial strain that households face due to rising living expenses without driving up inflation.
Geopolitical tensions in the area may rise as a result of China characterizing the presidential. And parliamentary elections.
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. Tensions between China and Taiwan could escalate at any time. Which could affect market sentiment and put pressure on currency pairs like AUDUSD.
The US Dollar Index, or DXY, may continue to rising trend, driven by higher US Treasury rates. The S&P Global Manufacturing PMI, however, deviated from the predicted consistency at 47.2 and reported a lower-than-expected number of 47.9.
On Wednesday, investors will probably be watching US data such as the Federal Open Market Committee (FOMC) Minutes, the December ISM Manufacturing PMI, and the November JOLTS Job Openings.
The FOMC Minutes may be significant after Chairman Jerome Powell alluded to possible rate reductions in the wake of the most recent Federal Reserve (Fed) monetary policy decision.
Daily Market Movers: The strengthening US dollar sentiment presents 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.
China’s December NBS Manufacturing PMI dropped to the reading of 49.0 as opposed to the prior 49.4 value. 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 Caixin Manufacturing Purchasing Managers Index (PMI) for China increased to 50.8, above the prior reading of 50.7 and the market consensus of 50.4.
In December, the Chicago Purchasing Managers Index dropped from 55.8 to 46.9.
