AUD/USD pares the first weekly loss in five below 0.6800 on mixed Australia PMI numbers

• AUD/USD picks up bids to refresh intraday high while consolidating the weekly loss after Aussie data.
• Australia S&P Global PMIs for June came in mixed with upbeat Manufacturing gauge contrasting with softer Services, Composite figures.
• Economic fears surrounding China, hawkish Fed signals and concerns about global recession due to higher rates weigh on AUD/USD.
• US PMIs may entertain traders but China’s holiday can restrict the Aussie pair moves.

AUD/USD renews intraday high at 0.6762 even as Australia’s S&P Global PMIs for June register mixed data on early Friday. The reason could be linked to the US Dollar’s consolidation amid recently mixed comments from Federal Reserve (Fed) and Treasury officials. However, the broad recession woes and hawkish statements from Fed Chair Powell keep the Aussie bears hopeful.

That said, the preliminary readings of Australia’s S&P Global Manufacturing PMI for June rose past 48.1 market forecast and 48.4 previous readings to arrive at 48.6 whereas the Services counterpart crossed the analysts’ estimations of 50.1 with 50.7 but slipped below 52.1 prior. With this, the S&P Global Composite PMI for the said month eased to 50.5 versus 51.6 prior.

Elsewhere, the recent downbeat comments from Thomas Barkin, President of the Federal Reserve Bank of Richmond, as well as US Treasury Secretary Jannet Yellen prod the AUD/USD bears. That said, Fed’s Barkin showed readiness to vote for rate cuts on conviction of a slowdown in inflation while US Treasury Secretary Yellen flags recession fears as Fed tightens policy.

However, the market’s rush toward the US Dollar, amid firmer US Treasury bond yields, hawkish comments from Fed Chair Powell and major central banks’ rate hikes, exert downside pressure on the AUD/USD price.

The US Dollar Index (DXY) bounced off six-week low print the biggest daily gains since early June, grinding higher around 102.40 by the pres time, whereas the US Treasury bond yields were firmer around weekly top. It should be observed that the US 10-year and two-year Treasury bond yields rose the most in a week to 3.80% and 4.79% in that order.

A slew of central banks announced interest rate increases on Thursday. Among them, the majority crossed the market consensus but failed to impress respective currencies on fears that the broad rate hikes have an economic toll, which in turn directs the market players toward the US Dollar’s haven demand. Among them, the Bank of England (BoE), informally known as the “Old Lady”, surprised markets by lifting benchmark rates by 50 basis points (bps) to 5% versus major expectations favoring a 0.25% rate hike. Further, the Swiss National Bank (SNB) matched market forecasts while announcing 25 basis points increase in its benchmark interest rate, to 1.75%. This was the fifth consecutive rate lift from the Swiss central bank. Additionally, the Central Bank of the Republic of Türkiye (CBRT) hiked rates for the first time since August 2021 whereas the Norges Central Bank announced rate increases.

Talking about the US catalysts, US Chicago Fed National Activity Index for May dropped to -0.15 versus 0.0 expected and upwardly revised 0.14 previous readings. Further, the Initial Jobless Claims reprinted the 264K figures (revised) for the week ended on June 16 compared to 260K market forecasts. It’s worth noting that the Continuing Jobless Claims dropped unexpectedly to 1.759M from 1.772M (revised) prior and 1.782M analysts’ estimations. Additionally, US Existing Home Sales marked a surprise recovery by 0.2% MoM for May compared to -0.6% expected and -3.2% prior (revised from 3.4%).

Furthermore, Fed Chairman Jerome Powell repeated most of his previous day’s remarks during his testimony 2.0, this time in front of the Senate Housing Committee. However, his statements like, “(It) will be appropriate to raise rates again this year, perhaps two more times,” allowed the US Dollar to refresh the intraday high while eyeing to reverse Wednesday’s losses.

Having witnessed the initial reaction to the Aussie data, AUD/USD pair may remain lackluster amid a holiday in China, as well as cautious mood ahead of the US PMIs for June.

Technical analysis

A daily closing below the 200-day Exponential Moving Average (EMA), around 0.6760 by the press time, becomes necessary for the AUD/USD bear’s conviction.