Anna 
The Australian dollar (AUD) continued its sixth consecutive session of decline on Friday, facing downward pressure even as the U.S. Dollar Index (DXY) remained stable. China’s Caixin Services PMI improvement in December did not provide relief to the AUD/USD pair. The weak market sentiment, coupled with a general decline in commodity prices, contributed to the Australian dollar’s persistent weakness.
Australia’s Judo Bank Purchasing Managers Index (PMI) data revealed a contraction in business activity in both the services and manufacturing sectors. The services PMI specifically indicated the fastest contraction in the services sector since the third quarter of 2021. Despite the economic slowdown, Judo Bank economist Matthew De Pasquale believes it is not gaining momentum.
While the U.S. Dollar Index (DXY) shows stability, there is a slight tilt toward positive sentiment and potential gains. However, the retracement of recent rises in U.S. Treasury yields may exert some pressure on the dollar. Positive employment data released on Thursday, including a surge in ADP employment changes and a decline in initial jobless claims, could provide support to the dollar.
The market is closely watching the dynamics of the U.S. labor market, with upbeat employment data potentially impacting the dollar’s performance. Additionally, the S&P Global Composite PMI report for December indicated a slight decline in business activity, contributing to the overall market sentiment.
