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AUD/USD inches up on weak US PMI, RBA policy outlook supports

  • AUD/USD trades slightly higher after disappointing US ISM Manufacturing PMI data.
  • Rising geopolitical tensions boost safe-haven demand in favor of the US Dollar.
  • Expectations around Australian inflation and RBA policy remain a potential support.

AUD/USD trades around 0.6700 on Monday, up 0.10% on the day, after erasing previous intraday losses following the release of the US Purchasing Managers Index (PMI) data. The Australian Dollar (AUD) shows resilience despite an uncertain macroeconomic backdrop.

Sentiment around the Australian Dollar is influenced by the latest Chinese statistics. China’s RatingDog Services PMI slipped to 52.0 in December from 52.1 in November, pointing to a slight slowdown in activity in the services sector. At the same time, RatingDog reported last week that the Manufacturing PMI edged up to 50.1 in December from 49.9 previously, moving marginally back into expansion territory. Any change in the Chinese economy remains crucial for the Australian Dollar, as China is Australia’s main trading partner.

On the domestic front, expectations of monetary tightening continue to provide underlying support to the Aussie. Market participants are turning their attention to Australia’s fourth-quarter Consumer Price Index (CPI), due on January 28. Several analysts believe that a stronger-than-expected core inflation reading could prompt the Reserve Bank of Australia (RBA) to raise interest rates at its February 3 meeting. RBA Governor Michele Bullock recently noted that while the board did not explicitly consider an immediate rate hike, it did discuss the conditions under which monetary policy might need to be tightened.

On the US side, the US Dollar (USD) was supported earlier in the day by safe-haven demand amid heightened geopolitical tensions in Latin America. The Greenback benefited from developments surrounding Venezuela, after the United States (US) captured President Nicolas Maduro, an event that has revived geopolitical concerns and strengthened the US Dollar.

However, the USD trend reverted after the release of the US Institute for Supply Management (ISM) Manufacturing PMI. The index fell for a third consecutive month to 47.9 in December, down from 48.2 in November and below market expectations of 48.3. The reading signals a faster contraction in US manufacturing activity, driven mainly by declines in production and inventories, while price pressures remain elevated. Although some components, such as New Orders and Export Orders, showed marginal improvement, the overall data reinforce signs of a cooling industrial sector, adding nuance to the outlook for US growth and monetary policy expectations.

Markets continue to price in two additional Federal Reserve (Fed) rate cuts in 2026. Investors also remain attentive to the prospect of US President Donald Trump nominating a new Fed Chair when Jerome Powell’s term ends in May, a move seen as potentially tilting monetary policy toward a more accommodative stance. Minutes from the December Federal Open Market Committee (FOMC) meeting showed that several officials judged it would be appropriate to pause further rate cuts as long as inflation continues to ease gradually.

Australian Dollar Price Today

The table below shows the percentage change of Australian Dollar (AUD) against listed major currencies today. Australian Dollar was the strongest against the Canadian Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.17%-0.27%-0.23%0.20%-0.16%-0.23%0.18%
EUR-0.17%-0.41%-0.33%0.03%-0.33%-0.38%0.01%
GBP0.27%0.41%0.06%0.48%0.11%0.05%0.46%
JPY0.23%0.33%-0.06%0.42%0.05%-0.01%0.40%
CAD-0.20%-0.03%-0.48%-0.42%-0.36%-0.42%-0.02%
AUD0.16%0.33%-0.11%-0.05%0.36%-0.05%0.34%
NZD0.23%0.38%-0.05%0.00%0.42%0.05%0.40%
CHF-0.18%-0.01%-0.46%-0.40%0.02%-0.34%-0.40%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Australian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent AUD (base)/USD (quote).

Author

Ghiles Guezout

Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.

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