AUD Steady As China Manufacturing PMI Beats Expectations

The Australian dollar strengthened as China’s Caixin Manufacturing Purchasing Managers’ Index rose to 51.8 in June, stronger than expected to fall to 51.2 after 51.7 in May. Any changes in the Chinese economy could have an impact on the Australian market as the two countries are close trading partners.

The Australian dollar came under pressure as investor sentiment soured after Australia’s June manufacturing Purchasing Managers’ Index (PMI) recorded the fastest contraction since May 2020. Market focus now turns to the Reserve Bank of Australia’s upcoming policy meeting minutes due on Tuesday for monetary policy direction.

The dollar fell as expectations for a rate cut by the U.S. Federal Reserve (Fed) in 2024 increased. The CME FedWatch tool showed that the probability of a 25 basis point rate cut by the Fed in December rose to nearly 32.0% from 28.7% a week ago.

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