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Australian PMI data reveals mixed results, with manufacturing steady but the services sector weakening.
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AUD/USD retreats from early gains, weighed down by a modest rebound in the US Dollar.
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The Aussie pair falls below 0.6420 as market attention turns to the upcoming US PMI report.
The Australian Dollar (AUD) slipped against the US Dollar (USD) on Thursday, erasing earlier gains and trading near 0.6420 during European hours, down about 0.50%. The AUD/USD pair initially rose following the release of Australia’s latest Purchasing Managers’ Index (PMI) data but reversed after a brief spike in volatility during the Asian session.
The preliminary S&P Global Composite PMI for May slowed slightly to 50.6 from 51.0 in April, indicating a modest slowdown in overall private business activity. Meanwhile, the Manufacturing PMI remained steady at 51.7, while the Services PMI eased to 50.5 from 51.0, reflecting a cooling services sector. This mixed data briefly pushed the pair toward the 0.6450 psychological level before sellers regained control.
The PMI figures suggest Australia’s economy is stable but lacks strong momentum, potentially giving the Reserve Bank of Australia (RBA) room to pause after its recent rate cut, while still leaving the door open for further easing if economic conditions weaken. At its May meeting, the RBA reduced the Official Cash Rate (OCR) by 25 basis points to 3.85%, down from 4.10%, citing moderating inflation and a more balanced risk outlook. The central bank highlighted that inflation has fallen significantly since its 2022 peak but remains cautious due to ongoing uncertainties surrounding aggregate demand and supply.
Meanwhile, the US Dollar Index (DXY), which measures the Greenback against six major currencies, recovered from a two-week low of 99.34 to trade near 99.80, snapping a three-day losing streak ahead of the US preliminary S&P Global PMI release scheduled for later Thursday.
