AUD/USD holds steady below 0.6550 as traders await Australian GDP release
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AUD/USD flat lines around 0.6540 in Tuesday’s early Asian session.
Softer economic data from the US and further signals from Fed officials add to the rate cut optimism.
Australian Q3 Gross Domestic Product report will be the highlight later on Wednesday.
The AUD/USD pair trades on a flat note near 0.6540 during the early Asian trading hours on Tuesday. Weaker-than-expected US economic data and rising US interest rate cut expectations in December drag the US Dollar (USD) lower against the Australian Dollar (AUD). Traders will closely monitor the Australian Gross Domestic Product (GDP) data for the third quarter (Q3), which is due on Wednesday.
A renewal in rate cut bets from the US Federal Reserve (Fed) exerted some selling pressure on the Greenback during the past week. Furthermore, the downbeat US Manufacturing Purchasing Managers Index (PMI) released on Monday might also undermine the USD and act as a tailwind for the pair. The Institute for Supply Management (ISM) revealed on Monday that the US Manufacturing PMI declined to 48.2 in November, down from 48.7 in October. This reading came in below the market consensus of 48.6.
Australia’s GDP report will be in the spotlight later on Wednesday. Economists forecast the Australian economy to grow 0.7% QoQ in the three months through September, the strongest reading since late 2022. The annual GDP is projected to expand 2.2% during the same period, supported by the RBA easing earlier this year. In case of a stronger-than-expected outcome, this could lift the Aussie against the US dollar in the near term.
On the other hand, softer Chinese economic data could weigh on the China-proxy AUD, as China is a major trading partner for Australia. Data released by RatingDog on Monday showed that China's Manufacturing PMI unexpectedly fell to 49.9 in November, versus 50.6 prior. This figure came in below the market consensus of 50.5. A reading above the 50 benchmark level suggests an expansion, while one below that indicates contraction.
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