Australian Dollar remains depressed below 0.6900 vs firmer USD after China's PMI

AUD/USD attracts fresh sellers on Wednesday as a combination of factors underpins the USD.
The Iran uncertainty and rising Fed rate hike bets continue to act as a tailwind for the buck.
Spot prices move little following the release of in-line China’s RatingDog Manufacturing PMI.

Haresh Menghani FXStreet

The AUD/USD pair struggles to capitalize on the previous day's goodish rebound from the 0.6865 region, or a three-month low, and meets with a fresh supply during the Asian session on Wednesday. Spot prices weakened back below the 0.6900 mark in the last hour and moved little following the release of China's private manufacturing PMI.

The latest data published by RatingDog showed that China's Manufacturing PMI eased to 51.7 in June from 52.2 in May. This comes on top of official PMIs released on Tuesday, which showed that business activity barely expanded last month on the back of sluggish domestic demand and weak consumer spending, and undermines the China-proxy Aussie. This, along with a modest US Dollar (USD) uptick, exerts some downward pressure on the AUD/USD pair.

The uncertainty over US-Iran talks benefits the Greenback's relatively safe-haven status amid hawkish US Federal Reserve (Fed) expectations. US negotiators Jared Kushner and Steve Witkoff arrived in Qatar on Tuesday for talks about the implementation of an initial deal to end the war in Iran. The latter, however, said that it would not meet with US envoys, clouding the prospects for lasting peace between the two countries and keeping geopolitical risk premiums in play.

Meanwhile, the US Job Openings and Labor Turnover Survey (JOLTS) showed on Tuesday that job openings edged up to a two-year high level of 7.594 million at the end of May, pointing to a still resilient labor market. Moreover, renewed US-Iran hostilities have revived inflation fears, boosting bets for an imminent rate hike by the US Federal Reserve (Fed). This is seen as another factor acting as a tailwind for the USD and contributing to the AUD/USD pair's slide.

Traders now look to Fed Chairman Kevin Warsh's appearance at the European Central Bank (ECB) Forum in Sintra. Adding to this, Wednesday's US economic docket, featuring the release of the ADP report on private-sector employment and the ISM Manufacturing PMI, should provide some impetus later during the North American session. The focus will then shift to the key US monthly jobs data – popularly known as the Nonfarm Payrolls (NFP) report on Thursday.

Economic Indicator

RatingDog Manufacturing PMI

The RatingDog Manufacturing Purchasing Managers Index (PMI), released on a monthly basis by Caixin Insight Group and S&P Global, is a leading indicator gauging business activity in China’s manufacturing sector. The data is derived from surveys of senior executives at both private-sector and state-owned companies. 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 manufacturing economy is generally expanding, a bullish sign for the Renminbi (CNY). Meanwhile, a reading below 50 signals that activity among goods producers is generally declining, which is seen as bearish for CNY.

GBP/USD weakens below 1.3250 on UK political risks, BoE repricing

The GBP/USD pair trades in negative territory around 1.3245 during the early Asian trading hours on Wednesday. Traders await the UK political developments, focusing on potential leadership by Andy Burnham and adherence to existing fiscal rules. Bank of England Governor Andrew Bailey is set to speak later in the day. On Thursday, all eyes will be on the US jobs data for June.

EUR/USD declines to near 1.1400 as softer German inflation undercuts ECB hike bets

The EUR/USD pair loses momentum to near 1.1410 during the early Asian trading hours on Wednesday, pressured by receding bets for aggressive tightening by the European Central Bank (ECB). Traders will take more cues from the preliminary reading of the Harmonized Index of Consumer Prices from the Eurozone and US Manufacturing Purchasing Managers Index report, which are due later in the day.

Gold's path of least resistance remains to downside ahead of Warsh

Gold comes under renewed selling pressure early Wednesday and gives up $4,000 yet again. The US Dollar stands tall on surging USD/JPY, Mideast woes and hawkish Fed bets. Gold remains poised to crack November 2025 lows near $3,930 amid bearish technicals.

Bitcoin drops near $58K as ETF outflows surge, downside risks persist

Bitcoin could see a short-term relief from heavy selling pressure as quarter-end portfolio rebalancing could potentially revive spot BTC exchange-traded funds inflows, according to a K33 report on Tuesday.

Why a hawkish Bank of Japan could trigger the next Bitcoin sell-off

The Japanese Yen hits a 40-year low of 162.00 against the US Dollar, raising concerns about intervention or additional rate hikes by the Bank of Japan. BoJ may sell US Treasuries to buy back Yen, potentially pushing US bond yields higher and making Bitcoin less attractive to investors.

Kevin Warsh isn't expected to say much in Sintra: That's exactly why markets will listen

Financial markets could find an important catalyst in the enchanting, fairytale-like landscape of Sintra this week. The ECB Forum will, as it does every year, gather the crème de la crème of central banks. The new boss at the Fed, who has clearly said that the Fed should stop explaining everything, will need to talk – and traders should listen.