AUD/USD hesitates below 0.6550 with macroeconomic data weighing

The Aussie Dollar hesitates as weak macroeconomic figures offset the positive market sentiment.
Australian inflation and private credit figures disappointed earlier on Monday.
Weak manufacturing data from China increased pressure on the AUD.

Guillermo Alcala FXStreet

The Australian Dollar is going through choppy and volatile trading around the 0.6530 area on Monday. The favourable market sentiment amid some progress in the trade talks between the US and some trading partners is boosting risk appetite but downbeat data from Australia and China are weighing on the pair.

The AUD/USD is trading with minor gains on Monday, favoured by the overall USD weakness, yet with price action contained within Friday’s range after rejection at the 0.6550 resistance area earlier on Monday

Australian inflation and credit figures disappoint

In Australia, inflation and private credit figures have failed to support the pair. The TD-MI inflation gauge ticked up 0.1% in June following a 0.4% but was short of the 0.2% forecasted by market analysts. The yearly rate declined for the second consecutive month, to 2.4% suggesting that price pressures keep moderating.

Somewhat later, Australia’s Private Sector Credit figures disappointed. Credit growth slowed down to 0.5% in May from 0.7% in April, and short of the 0.7% increase expected by the markets.

Beyond that, Data from China, Australia's major trade partner, has failed to improve confidence on the AUD, as manufacturing activity contracted for the third consecutive month, weighed by weak domestic demand and the uncertain global trade outlook.

Economic Indicator

TD-MI Inflation Gauge (YoY)

The TD-MI inflation gauge, released by Melbourne Institute, is designed to provide a timely and accurate monthly measure of inflation in Australia. Based on the Australian Bureau of Statistics methodology for calculating the quarterly consumer price index, the Melbourne Institute Monthly Inflation Gauge estimates month-to-month price movements for a wide-ranging basket of goods and services across the main capital cities of Australia. The YoY reading compares prices in the reference month to a year earlier. The higher the inflation, the stronger the effect it will have on the probability of an interest-rate hike by the RBA. Generally speaking, a high reading should be taken as positive, or bullish, for the AUD, while a low reading is seen as negative or bearish.

Economic Indicator

Private Sector Credit (MoM)

The Private Sector Credit released by the Reserve Bank of Australia is an amount of money that the Australian private sector borrows. It shows if the private sector can afford large expenses, which can fuel economic growth. It is considered as an indicator of business conditions and the overall economic condition in Australia. Generally, a high reading is seen as positive (or Bullish) for the AUD, whereas a low reading is seen as negative.

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