Ella 
The Australian dollar fell for a second consecutive day on Thursday. AUD/USD is under pressure following the release of positive S&P Global Purchasing Managers’ Index (PMI) data from the United States on Wednesday. The upbeat data could reduce the chances of a rate cut by the Federal Reserve in March, sending AUD/USD lower. Additionally, market bets on a rate cut by the Federal Reserve in March have now fallen below 40%, according to CME’s FedWatch tool, down sharply from around 80% a month ago.
The Australian dollar fell despite improved preliminary Australian Purchasing Managers Index (PMI) data released on Wednesday. An announcement from the Reserve Bank of Australia (RBA) showed that over the past six months, businesses generally expected their price growth to slow, with average expectations that prices would remain above the RBA’s inflation target range of 2.0-3.0%. The announcement also noted that factors such as slowing demand growth and intensifying competition are expected to cause corporate price growth to slow further in the coming quarters.
The U.S. Dollar Index (DXY) struggled to recover from its recent losses, supported by higher U.S. Treasury yields. However, risk-on sentiment keeps the dollar challenged ahead of the Federal Reserve’s (Fed) interest rate decision on January 31. Investors are likely to focus on U.S. fourth-quarter annual gross domestic product data due to be released on Thursday. The data will provide insight into overall economic performance and could influence market expectations for the Fed’s monetary policy stance.
