The Australian Dollar stopped its slide on Friday, getting a boost from new PMI (Purchasing Managers Index) numbers that point to a stronger economy. After two days in the red, AUD/USD ticked higher when Australia’s preliminary S&P Global Purchasing Managers Index came out. Manufacturing bounced back, moving up to 51.6 this month from 49.7 — back in expansion territory. Services did even better, rising to 52.7, which pushed the overall Composite PMI up to 52.6.
RBA Still Playing It Safe
The positive data gave the Aussie some support, but nobody expects the Reserve Bank of Australia to get carried away. The RBA’s November meeting minutes show that policymakers plan to keep interest rates steady if the economy keeps surprising to the upside. Assistant Governor Sarah Hunter also warned that strong growth could push up inflation. She pointed out that inflation numbers jump around from month to month, so the bank doesn’t want to react to just one piece of data.
Markets are on the same page. ASX 30-Day Cash Rate Futures put the chances of a December rate cut at just 8%, so don’t expect much to change soon.
US Dollar Loses Steam as Traders Bet on Fed Cut
Meanwhile, the US Dollar finally took a breather after a five-day run, with traders piling into bets that the Federal Reserve will cut rates in December. The Dollar Index hovered near 100.10, and everyone’s waiting for the next round of US PMI numbers. September’s jobs report was strong, but rising unemployment has traders thinking the Fed could go easier on policy. Right now, the CME FedWatch Tool shows a 36% chance of a quarter-point cut next month.
Cautious comments from Fed officials and political drama in Washington haven’t helped the Greenback, and that’s given the Aussie Dollar a bit more room to breathe.
