The Australian Dollar (AUD) is holding ground against the US Dollar (USD) on Friday, trading around 0.6590 after recording modest losses in the previous session. The pair remains largely steady following the release of S&P Global Australia Purchasing Managers’ Index (PMI) data, with investors digesting mixed domestic and global cues.
Australian PMI and trade data signal slower growth
S&P Global Australia Composite PMI fell to 52.4 in September from 55.5 in August, marking continued monthly expansion but at the slowest pace since June. Services PMI also declined to 52.4 from 55.8, signaling ongoing growth in the sector for the 20th consecutive month, albeit at a weaker rate.
Australia’s trade surplus narrowed to AUD 1.825 billion in August, well below expectations of AUD 6.5 billion, as exports fell 7.8% month-on-month, primarily due to a drop in gold shipments. Imports rose 3.2%, following a decline in July, highlighting mixed economic momentum.
RBA maintains cautious stance
The Reserve Bank of Australia (RBA) kept the Official Cash Rate at 3.6% in September. In its Financial Stability Review, the central bank highlighted risks from elevated asset prices, stress in sovereign debt markets, and the slowdown in China’s property sector. RBA Governor Michele Bullock noted that inflation remains contained, though some components of the monthly CPI were slightly above expectations.
USD strength and US macro outlook
The US Dollar Index (DXY) extended gains to around 97.90, supported by persistent expectations of Federal Reserve (Fed) rate cuts later this year. The partial US government shutdown has delayed key data releases, including September’s Nonfarm Payrolls (NFP), while ADP employment and Job Openings reports point to a cooling labor market, reinforcing bets on Fed easing.
Technical outlook: AUD/USD tests 0.6600
From a technical perspective, AUD/USD remains within an ascending channel, reflecting a bullish bias. Immediate support sits at the nine-day EMA near 0.6595, followed by the 50-day EMA at 0.6560 and the channel’s lower boundary around 0.6550. Resistance is seen at the 0.6600 psychological level, with a break above potentially targeting September’s 12-month high at 0.6707 and the channel’s upper boundary around 0.6760.
On the downside, a breach below the channel could expose the pair to further losses toward the August 21 low near 0.6414.
