AUD/USD extends losing streak for fourth trading day, Fed Powell’s speech in focus

AUD/USD declines for fourth straight trading day ahead of preliminary US S&P Global PMI data for August.
The Australian PMI for August came in stronger due to robust demand in both manufacturing and the services sector.
Investors await Fed Powell’s speech at the Jackson Hole Symposium.

Sagar Dua FXStreet

The AUD/USD pair extends its losing streak for the fourth trading day on Thursday. The Aussie pair slides to near 0.6415 in the European trading session, the lowest level seen in almost two months.

The Australian Dollar (AUD) faces selling pressure even as preliminary Australian S&P Global Purchasing Managers’ Index (PMI) data for August came in stronger. The Composite PMI increased to 54.9 from 53.8 in July, led by a significant growth in activities in manufacturing and the services sector.

Meanwhile, the US Dollar (USD) trades sideways ahead of flash United States (US) S&P Global PMI data for August, which will be published at 13:45 GMT. At the time of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades close to the weekly high near 98.40.

Economists expect the Manufacturing PMI is expected to come in at 49.5, down from 49.8 in July, suggesting that the activity contracted at a faster pace. The Service PMI is also seen lower at 54.2 from the prior release of 55.7.

This week, the major trigger for the US Dollar will be Federal Reserve (Fed) Chair Jerome Powell’s speech at the Jackson Hole (JH) Symposium on Friday. Ahead of Fed Powell’s speech, traders are confident that the central bank will cut interest rates by 25 basis points (bps) to 4.00%-4.25%, according to the CME FedWatch tool.

The Federal Open Market Committee (FOMC) minutes of the July policy meeting showed on Wednesday that a majority of officials, including Jerome Powell, argued in favor of holding interest rates steady until they get clarity on the “magnitude and persistence of higher tariffs’ effects on inflation”.

Economic Indicator

S&P Global Composite PMI

The Composite Purchasing Managers Index (PMI), released on a monthly basis by S&P Global, is a leading indicator gauging private-business activity in Australia for both the manufacturing and services sectors. The data is derived from surveys to senior executives. Each response is weighted according to the size of the company and its contribution to total manufacturing or services output accounted for by the sub-sector to which that company belongs. Survey responses reflect the change, if any, in the current month compared to the previous month and can anticipate changing trends in official data series such as Gross Domestic Product (GDP), industrial production, employment and inflation. The index varies between 0 and 100, with levels of 50.0 signaling no change over the previous month. A reading above 50 indicates that the Australian private economy is generally expanding, a bullish sign for the Australian Dollar (AUD). Meanwhile, a reading below 50 signals that activity is generally declining, which is seen as bearish for AUD.

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