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• Australian Dollar has suffered extended declines in recent sessions as RBA gains slowly fade.
• PMI figures from Australia reveal weaker-than-expected data.
• Fragility in the Australian economy seems to be driving demand off the Aussie.

In Friday's session, the Australian Dollar (AUD) intensified its losses against its peers. The AUD/USD duo has been testing its notable support at the 0.6640 threshold, the 20-day Simple Moving Average (SMA). Selling pressure emerged from the Asian markets in light of soft June preliminary PMIs from Judo Bank in Australia. This weakness has been compounded by high US Treasury yields and optimistic PMI data from S&P in the US, lifting the USD.

Notwithstanding certain signs of frailty in Australia’s economic scene, the stubbornly high inflation continues to prompt the Reserve Bank of Australia (RBA) to delay potential rate cuts, potentially offsetting the Aussie's losses. The RBA is primed to be among the last G10 nation central banks to initiate rate cuts, which might perpetuate the Aussie's gains.

Daily digest market movers: Australian Dollar grapples with weakened data, awaits further cues
 

• Australia reported weaker preliminary data from the June Purchasing Managers Index (PMI) set, with Manufacturing at 47.5 versus May's 49.7, Services at 51.0 against 52.5, and the Composite rate falling for a third consecutive month to 50.6, from 52.1 in May.
• In contrast, US business activity in the private sector continued to showcase solid growth, with the S&P Global Composite PMI improving slightly to 54.6.
• Governor Bullock, during her latest press conference, confirmed that the Board discussed potential rate hikes, dismissing considerations of rate cuts in the near term.
• Bullock maintained, “Inflation remains above target and is proving persistent,” specifying that "the Board expects that it will be some time yet before inflation is sustainably in the target range."
• RBA affirmed its readiness to do "what is necessary" to guide inflation back within target parameters.
• Market anticipates nearly 50 bps of easing by December 2025, while rate hikes in August and September are yet to be ruled out on the RBA’s side.
• Fed signals only one cut in 2024, while markets continue to hope for a September cut.

Technical analysis: Signs of bullish strength waning, bears time now
 

The technical front reveals weakened momentum, with the Relative Strength Index (RSI) remaining above 50 but tilting downwards and the Moving Average Convergence Divergence (MACD) continuing to chart red bars. For further confirmation of a more solid buying stance, the AUD/USD pair needs to firmly support itself beyond the 20-day Simple Moving Average (SMA). Sellers might extend trials of the mentioned SMA support in ensuing sessions to test its resilience.

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