The Australian Dollar (AUD) continues to show strength, enjoying its third consecutive day of gains against the US Dollar (USD) following the release of significant economic data. The recent updates were driven by the Judo Bank Australia Purchasing Managers’ Index (PMI) and the Caixin Services PMI, which are vital indicators for the Australian economy, heavily reliant on its trade relationship with China. The Judo Bank Australia Composite PMI for December 2024 was adjusted to 50.2, representing a slight increase from 49.9 the previous month. This marks the third month of modest growth in the private sector, primarily fueled by the services sector, despite ongoing contraction in manufacturing.
The Caixin Services PMI for China rose to 52.2 in December, up from 51.5 in the prior month and surpassing market expectations of 51.7. This indicates the fastest rate of growth in the services sector since May. However, the Caixin Manufacturing PMI experienced an unexpected decline, falling to 50.5 from 51.5, which missed the predicted figure. These data points underscore the mixed performance of China’s economy, which is considered resilient despite a challenging global backdrop. Observations suggest that ongoing economic management strategies will bolster growth prospects, particularly through supportive fiscal policies.
Meanwhile, the US Dollar Index remains steady near the 109.00 mark, reflecting overall strength against major currencies. The recent ISM Manufacturing PMI data showed improvement, moving to 49.3 in December from 48.4 in November. This came alongside lower-than-expected initial jobless claims, indicating a stronger labor market. However, concerns remain over upcoming economic policies and geopolitical tensions, which may impact market sentiment toward the USD.
In technical terms, the AUD/USD pair is currently testing the 14-day Exponential Moving Average (EMA) at approximately 0.6243, while trading around 0.6230. The bearish outlook persists as the currency pair remains within a downward channel. Nevertheless, there are signs of potential momentum shifts with the Relative Strength Index (RSI) climbing above 30, presenting a scenario where the bearish trend could weaken. Resistance is expected near 0.6300, whereas support might be tested around 0.6020 in the event of further downward movement.
