AUD/USD Daily Forecast: Aussie Services PMI Boosts RBA Rate Hike Speculation

Aussie Services PMI

Private sector PMIs for August influenced the AUD/USD pair on Thursday, August 22. The Judo Bank Services PMI may have more impact on sentiment toward the RBA rate path as a major contributor to headline inflation.

The Judo Bank Services PMI rose unexpectedly from 50.4 in July to 52.2 in August.

According to the August Survey,

• Staffing levels increased due to higher new work inflows.
• Average input prices advanced at the fastest pace in almost 18 months.
• Services providers raised prices at the softest pace since January to boost sales.

The rise in employment and higher input prices may draw the RBA’s interest. A tighter labor market and rising wages could boost disposable income, possibly driving consumer spending. Higher consumer spending may fuel demand-driven inflation, supporting a more hawkish RBA rate path and an AUD/USD move toward $0.70.

Expert Views on the Aussie Economy and Inflation

Judo Bank Chief Economic Advisor Warren Hogan remarked on the August survey, stating,

“There is nothing in these results that allows us to reduce the probability that the RBA may still have to raise the cash rate further before a concerted easing cycle can begin.”

Key US Data to Watch for AUD/USD Traders

The US labor market and services sector could be crucial data released on Thursday as Fed Chair Powell’s speech looms.

US Jobless Claims

Economists forecast initial jobless claims to increase from 227k in the week ending August 10 to 230k in the week ending August 17.

A larger-than-expected increase may raise concerns about the US labor market. Moreover, a move towards 250k could retrigger fears of a US economic recession. Weaker labor market conditions may negatively impact wages and disposable income, possibly reducing consumer spending. A downward trend in consumer spending could affect the economy as it contributes over 60% to GDP.

US Services PMI

Economists predict the S&P Global Services PMI to fall modestly from 55.0 in July to 54.0 in August.

Accounting for over 70% of the US economy, a larger-than-expected decline may fuel speculation about a US recession. Investors should also consider the sub-components, including prices and job creation rates.

Downward input price trends, weaker job creation rates, and higher-than-expected jobless claims could raise investor bets on a 50-basis point September Fed rate cut.

Weaker-than-expected US data may support an AUD/USD move toward $0.70 on speculation about a more dovish Fed rate path.

Expert Views on the US Economy

AMP Head of Investment Strategy and Chief Economist Shane Oliver remarked on the recent US CB Leading Economic Indicator, saying,

“US Leading Economic Indicator continues to fall pointing to ongoing high risk of recession.”

The Kobeissi Letter discussed US bankruptcy filings and recession risks, stating,

“US new bankruptcy filings hit 6,276 in Q2 2024, the highest level since Q2 2017. Chapter 11 cases hit 2,462 last quarter, exceeding every other quarter over the last 10 years. Bankruptcies have been rising at a pace seen during major economic downturns. Is a soft landing still attainable?”

Short-Term Forecast: Bullish

Near-term AUD/USD trends will hinge on the US Services PMI, jobless claims, and the Fed. Weaker US economic indicators could boost bets on a 50-basis point Fed rate cut, possibly pushing the AUD/USD toward $0.70.

Investors should remain alert to US economic data and the Fed influencing AUD/USD price trends. Monitor the real-time data, news updates, and expert commentary to adjust your trading strategies.

Stay updated with our latest views and analysis to manage exposures to the forex markets.

AUD/USD Price Action

Daily Chart

The AUD/USD held comfortably above the 50-day and 200-day EMAs, affirming the bullish price signals.

A breakout from $0.67500 could support a move toward the $0.67967 resistance level. Furthermore, a break above the $0.67967 resistance level may give the bulls a run at the $0.68996 resistance level.

Investors should consider the services PMIs and Fed commentary.

Conversely, a break below the $0.67003 support level could signal a fall to the top trend line. A drop below the top trend line may bring the 50-day EMA into play.

With a 14-period Daily RSI reading of 67.40, the Aussie dollar could rise to the $0.67967 resistance before entering overbought territory.