AUD/USD Daily Forecast: Key Economic Indicators Signal Uptrend for Aussie

Australian Services PMI and the RBA Rate Path

On Wednesday, September 4, finalized Services PMI numbers may influence the AUD/USD and the RBA rate path.

According to the preliminary survey, the Judo Bank Services PMI increased from 50.4 in July to 52.2 in August. An upward revision could boost Aussie dollar demand as services account for over 70% of the economy.

Beyond the headline figure, investors should also consider subcomponents, including input prices and job creation rates. Upward trends in employment and input prices may fuel speculation about a Q4 2024 RBA rate hike. The services sector remains a significant inflation driver through housing rents, with labor market trends also crucial.

Will Aussie GDP Numbers Raise Bets on an RBA Rate Hike?

Later in the morning, Australian GDP numbers also require consideration. Economists expect the economy to grow by 0.3% in Q2 2024, up from 0.1% in Q1 2024.

A hotter-than-expected economy could fuel demand for the Aussie dollar and also raise bets on an RBA rate hike. Concerns about the effect of higher interest rates on households left the RBA in a holding pattern despite elevated inflation rates. Contributions from private consumption will be crucial. Upward trends in private consumption may fuel demand-driven inflation.

Higher-than-expected Services PMI and GDP numbers could push the AUD/USD toward $0.68. Conversely, an economic contraction may close the door on an RBA rate hike, possibly sending the AUD/USD pair down toward $0.66500.

Expert Views on the Australian Economy

David Scutt, Market Analyst at StoneX commented on Tuesday’s export data and the Australian economy, stating,

“Government demand expected to add 0.4ppts to GDP. Means we probably eke out a flat to tiny positive figure in Q2, although don’t rule out a small negative print.”

US Economic Calendar

Later in the session on Wednesday, US labor market data requires consideration. Economists expect JOLTs Job Openings to drop from 8.184 million in June to 8.100 million in July. A fall below 8,000 may signal a sharp deterioration in labor market conditions, possibly reigniting recession fears.

Weak labor market conditions could affect wage growth and disposable income, possibly curbing consumer spending. A pullback in consumer spending could impact the US economy as it contributes over 60% to GDP.

Other stats include factory orders and trade data. However, these will likely play second fiddle to the labor market data, which faces intensifying scrutiny.

Lower-than-expected job openings could impact US dollar demand, possibly pushing the AUD/USD toward $0.68. However, sub-8 million and US recession fears could trigger a flight to safety and an AUD/USD drop toward $0.66500.

Expert Views on the US Labor Market

On Monday, The Kobeissi Letter, an industry-leading commentary on the global capital markets, stated,

“Further evidence higher unemployment is coming: US consumers’ perceptions of the labor market have weakened to the worst level since 2021. […] In previous business cycles, has been a leading indicator for unemployment. It now suggests that the unemployment rate may increase toward 5.5% in coming months. The labor market is trending toward a recession.”

Short-Term Forecast: Bullish

Near-term AUD/USD trends will hinge on the services and GDP numbers from Australia. Weaker-than-expected numbers could reduce bets on an RBA rate hike, indicating an AUD/USD fall toward $0.66500. Furthermore, upbeat US labor market and services data could also fuel US dollar demand.

Investors should stay alert to economic data and central bank commentary that may influence 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 above the 50-day and 200-day EMAs, confirming the bullish price trend.

A return to $0.67500 could support a move to the $0.67967 resistance level. Furthermore, a breakout from $0.67967 could give the bulls a run at $0.68500.

Investors should consider the services and GDP numbers from Australia, and US labor market data.

Conversely, a break below the $0.67003 support level would bring the 50-day EMA into play.

With a 14-period Daily RSI reading of 51.55, the Aussie dollar may climb to $0.68500 before entering overbought territory.