Later in the session on Tuesday, the US manufacturing sector will be in focus. Economists forecast the ISM Manufacturing PMI to increase from 46.8 in July to 47.8 in August.
A higher-than-expected PMI may reinforce expectations of a soft US landing. However, the PMI numbers are unlikely to influence the Fed rate path, as manufacturing contributes less than 30% to US GDP.
Beyond the numbers, investors should continue monitoring comments from FOMC members. Recent economic indicators have reduced bets on a 50-basis point September Fed rate hike. Views on the US economy, inflation, the labor market, and the Fed rate path require consideration.
Weaker-than-expected manufacturing PMI numbers and FOMC member support for a 50-basis point Fed rate cut could push the AUD/USD towards $0.68.
According to the CME FedWatch Tool, the probability of a 50-basis point Fed rate cut fell from 36.4% on August 23 to 32.0% on September 2.
Shane Oliver, Head of Investment Strategy and Chief Economist at AMP, remarked on Friday's inflation numbers, stating,
"US Jul core PCE deflator slightly softer at 0.16%mom/2.6%yoy (mkt +0.2%m/+2.7%y), from 2.6%y in Jun PCE deflator in line at 0.2%m/2.5%y. Leaves Fed on track to cut in Sep, which in absence of much weaker jobs looks like being -0.25%."
On Friday, August 6, the US Jobs Report could dictate the Fed's September interest rate decision.
Near-term AUD/USD trends will hinge on the trade data from Australia and the US manufacturing sector data. Improving Australian trade terms could drive Aussie dollar demand. Conversely, softer-than-expected US PMI numbers could support a more dovish Fed rate path. The combination may signal a narrower interest rate differential, suggesting an AUD/USD move toward $0.68.
Investors should stay alert to economic data and central bank commentary that may influence AUD/USD price trends. Monitor the real-time data, news updates, and expert commentary to adjust your trading strategies.
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The AUD/USD remained comfortably above the 50-day and 200-day EMAs, affirming the bullish price trend.
A breakout from the $0.67967 resistance level could signal a move to $0.68500. Furthermore, a break above $0.68500 may bring the $0.68996 resistance level into play.
Investors should consider the trade data from Australia, US PMI numbers, and central bank commentary.
Conversely, a fall through the $0.67500 level could give the bears a run at the $0.67003 support level.
With a 14-period Daily RSI reading of 62.41, the Aussie dollar could return to $0.68500 before entering overbought territory.