AUD/USD remains lackluster around 0.6930 despite Aussie PMI beat estimates

• AUD/USD is not responding much to the higher-than-expected Aussie PMI data.
• The Manufacturing PMI has landed at 55.8 while the Services PMI has been recorded at 52.6.
• The DXY has failed to capitalize on hawkish guidance in Fed Powell’s testimony.

The AUD/USD pair is ignoring the higher-than-expected Purchase Managers Index (PMI) data reported by the IHS Markit. The Services PMI has landed at 52.6, significantly higher than the expectations of 49.1 but lower than the former figure of 53.2. While the Manufacturing PMI has been recorded at 55.8, higher than the consensus and the prior print of 54.7 and 55.7 respectively.

On a broader note, the antipodean is underperforming against the greenback despite the positive June meeting minutes from the Reserve Bank of Australia (RBA). As per the RBA minutes, the Australian economy doesn’t see any signs of a recession on the current horizon. Household spending is resilient despite depreciated paychecks due to higher price pressures.

On the employment front, the Unemployment Rate at 3.9% is going to remain untouched while fixing the inflation mess, which indicates that the labor market in the Australian economy is extremely tight. A minor increase in the Unemployment Rate while addressing the inflation mess could be manageable.

Meanwhile, the US dollar index (DXY) has faced barricades around 104.30 and is expected to extend its losses after violating the round-level support of 104.00. It looks like the hawkish guidance from Federal Reserve (Fed) chair Jerome Powell in his testimony has failed to fetch bids for the DXY. Fed Powell is expecting a consecutive 75 basis point (bps) interest rate hike in July monetary policy. Achievement of price stability in the economy is their ultimate goal. And, for the achievement of the same, a tight labor market and resilient demand in the US economy are highly supportive.