Ella 
In early Asian trading on Monday, the AUD/USD fluctuated and weakened below the mid-0.6500 level. AUD/USD has lost traction despite the US dollar (USD) and US yields moving lower. Ahead of US non-farm payrolls (NFP) data, investors are awaiting the release of Australia’s fourth-quarter gross domestic product (GDP). AUD/USD is currently trading around 0.6525, down 0.08% on the day.
On Friday, the U.S. ISM Manufacturing Purchasing Managers’ Index (PMI) fell below expectations, falling to 47.8 in February from 49.1 in January. The new orders index fell to 49.2, in contractionary territory, the production index fell to 48.4, and the employment index came in at 45.9. Additionally, the University of Michigan Consumer Sentiment Index fell to 76.9 from 79.6.
Atlanta Fed President Raphael Bostic said he expects a first rate cut to be appropriate, possibly as early as the end of this year, as the Fed’s preferred measure of inflation continues to slow. Financial markets have priced in a 70% chance that the Federal Reserve (Fed) will begin cutting interest rates at its June meeting.
Australia’s consumer price index (CPI), on the other hand, rose 3.4% in January, missing consensus expectations of 3.5%. Inflation in Australia supports the case for the Reserve Bank of Australia (RBA) to start cutting interest rates later this year. In addition, China’s Caixin Services Purchasing Managers Index released on Tuesday may affect market risk sentiment. Weaker-than-expected data could drag the Chinese proxy Australian dollar (AUD) lower and be bearish for the AUD/USD currency pair.
Australia’s building consent data will be released on Monday and Japan’s February composite purchasing managers’ index will be released on Tuesday. The highlight of the week will be Australian fourth quarter GDP growth data and US non-farm payrolls (NFP) data. These events will provide direction for the AUD/USD pair.
