Ella 
AUD/USD gave up the previous day’s gains and fell to around 0.6420 during the Asian session on Monday. However, AUD/USD found upside support following the release of Australian PMI data on Friday, coupled with a weaker US dollar.
Australia’s Purchasing Managers Index (PMI) data released on Friday improved slightly. The preliminary reading of the S&P Global Services Purchasing Managers’ Index for September was 50.5, up from 47.8 in August. However, the manufacturing PMI fell to 48.2 from 49.6 last time. The composite index also improved, rising to 50.2 from 48.0.
Minutes of the Reserve Bank of Australia’s (RBA) September monetary policy meeting showed that if inflation persists, further tightening of policy may be needed, but the case for keeping current policy unchanged is stronger.
Furthermore, recent economic data have not significantly changed the overall economic outlook. This dovish stance from the Reserve Bank of Australia could weaken AUD/USD. Additionally, traders will also be keeping an eye on Australia’s monthly consumer price index (CPI) and retail sales data due later this week.
The U.S. Dollar Index (DXY), which measures the greenback’s value against six major currencies, is currently hovering around 105.60. The index struggled to gain momentum, likely due to market caution ahead of U.S. economic data.
Investors will be keeping a close eye on the U.S. economic calendar, which includes key data such as consumer confidence, durable goods orders, jobless claims and core PCE, the Fed’s preferred inflation gauge.
The annual figure for core PCE is expected to fall to 3.9% from 4.2%. These data sets will provide insights into the US economic situation and inflationary pressures, influencing trading decisions on the AUD/USD currency pair.
However, as of press time, the 10-year U.S. Treasury yield had risen to 4.46%, an increase of 0.63%. Rising yields are likely to support AUD/USD.
Additionally, comments from Boston Fed President Susan Collins and U.S. Federal Reserve Board of Governors Michelle W. Bowman suggested further tightening of interest rates was possible, emphasizing the need for patience and More rate hikes to control inflation. Rising interest rates are likely to put pressure on the AUD/USD currency pair.
The Federal Reserve has pledged to keep interest rates higher for an extended period to get inflation back to its 2% target, raising expectations of at least another 25 basis points of interest rates before the end of the year.
Additionally, the Fed’s “dot plot” now shows just two rate hikes in 2024, down from the four hikes previously forecast.
