- AUD/USD is set to finish the week up by 2.23%.
- US Services and Composite PMIs plummeted below 50, suggesting a recession could be near.
- Hawkish RBA minutes revealed during the week cushioned the AUD/USD from falling further on weak Aussie PMIs.
The AUD/USD rises for the second consecutive day, registering solid gains amidst a fragile market mood, which shifted sour spurred by weaker than expected US PMIs, showing contraction lying ahead, while the greenback begins to pare some of its earlier losses.
The AUD/USD is trading at 0.6942, bouncing from daily lows at 0.6893 on soft Aussie data and hitting a daily high at 0.6977 before retracting to current price levels.
US Services and Composite PMis plunged to contractionary territory
During the New York session, S&P Global revealed July’s preliminary figures for the US, which showed that the manufacturing index ticked higher, but the services one dropped below 50. Therefore, the S&P Global Composite Index plunged to 47.6, further confirming the ongoing slowdown of the US economy. The AUD/USD jumped on the news, reaching its daily high.
Meanwhile, in the Asian session, the Australian PMIs slowed but remained in expansionary territory, triggering some downward pressure on the AUD/USD. Nevertheless, the RBA minutes released earlier in the week indicating the need for further rate hikes offered some cushion to the major, which later climbed towards its daily high.
In the meantime, the AUD/USD got bolstered by Chinese news. China revealed its intentions to consolidate its economic recovery and prioritize stable prices and employment, battered by Q2 Covid-19 lockdowns, which almost dragged the economy into recessionary territory.
What to watch
Next week, the Australian economic calendar will feature consumer inflation data, retail sales, and the Australian PPI. On the US front, the Federal Reserve Open Market Committee (FOMC) monetary policy decision, US inflation data, and Q2 Gross Domestic Product on its advance reading will give some guidance to AUD/USD traders.
