Australian Dollar Forecast: AUD/USD Poised for Reaction to Aussie and US PMIs

Australian Private Sector PMIs in Focus

On Monday, September 23, flash private sector PMIs from Australia will put the AUD/USD pair and the RBA rate path in focus. However, the Services PMI will impact Aussie dollar demand more as it accounts for over 70% of the Australian economy.

Economists expect the Judo Bank Services PMI to increase slightly from 52.5 in August to 52.6 in September. Better-than-expected numbers could lower investor expectations of a Q4 2024 RBA rate cut.

However, investors should consider subcomponents, including employment and prices. The services sector remains a significant contributor to overall inflation. Upward trends in job creation and input prices could support consumer spending, possibly fueling inflation. A higher-for-longer RBA rate path could affect borrowing costs, disposable income, and spending.

Better-than-expected Services PMI numbers could push the AUD/USD toward $0.70. Conversely, an unexpected fall in the Services PMI could increase bets on a Q4 RBA rate cut, possibly pulling the AUD/USD below $0.67500.

Expert Views on the Australian Economy

In light of recent PMI trends, experts weigh in on potential economic impacts. Judo Bank Economist Matthew De Pasquale commented on the August Services PMI survey, stating,

“Input price pressures have maintained the significant increase they saw in July, a level that has not been seen since early 2023. As noted in the Flash release, the combination of ongoing resilience in the services sector activity, a high level of government stimulus for households, and an uptick in input price pressures provide little comfort that Australia’s inflation pressures across domestic services will continue easing through the first half of FY25.”

US Economic Calendar

Later in the session on Monday, US private sector PMIs will also draw investor interest. The US Services PMI will likely have a greater impact on US dollar demand as it accounts for almost 80% of the US economy.

Economists expect the S&P Global Services PMI to fall modestly from 55.7 in August to 55.2 in September. A larger-than-expected fall in the Services PMI could reinforce expectations of multiple Q4 2024 Fed rate cuts.

However, investors should consider the employment and price subcomponents. Weaker job creation and input prices could signal a downward trend in disposable income, impacting consumer spending. A pullback in consumer spending may affect the US economy as private consumption accounts for over 60% of US GDP.

Short-Term Forecast for AUD/USD

Near-term AUD/USD trends will likely depend on the Services PMIs and Tuesday’s RBA interest rate decision. A weaker-than-expected Aussie Services PMI and dovish RBA could pull the AUD/USD below $0.67500. However, investors should also consider central bank commentary for clues on near-term policy goals.

Investors should closely monitor economic indicators that may influence AUD/USD trends. Monitor the real-time data, news updates, and expert commentary to adjust your trading strategies.

AUD/USD Technical Analysis

Daily Chart

The AUD/USD remains well above the 50-day and 200-day EMAs, confirming bullish price trends.

A break above the September 19 high of $0.68390 would support a move toward $0.68500. Furthermore, a breakout from $0.68500 may give the bulls a run at $0.69.

Service sector PMIs and central bank commentary require consideration.

Conversely, a break below the $0.68006 support level could give the bears a run at $0.67500. A fall through $0.67500 may bring the $0.67050 support level into play.

With a 14-period Daily RSI reading of 61.56, the Aussie dollar may climb to the $0.69 level before entering overbought territory.