Australian Dollar retreats as rising US yields overshadow upbeat Chinese PMI
AUD/USD declines 0.29% on Tuesday, trading around 0.7145 at the time of writing. The Australian Dollar (AUD) struggles to retain the momentum initially generated by encouraging Chinese economic data, while the US Dollar (USD) benefits from rising US Treasury yields.
The Australian Dollar (AUD) lost ground on Tuesday, settling near 0.7145 against the US Dollar (USD), as rising US yields overshadowed positive Chinese economic data. China's Manufacturing Purchasing Managers' Index (PMI) surged to 51.5 in August, surpassing expectations and indicating expansion, which typically benefits the AUD due to its strong trade ties with China.
However, Australian Building Permits fell 3.6% month-over-month in July, below forecasts, and annual approvals rose 9%, up from 8.9% previously, providing a mixed signal. The US Dollar gained strength as US Treasury yields climbed with elevated oil prices and heightened Middle East geopolitical tensions, driving the 10-year yield to 4.78%, near its recent peak of 4.81%.
The US Dollar Index (DXY), tracking the Greenback against six major currencies, hovered around 99.60 on Tuesday. This USD strength limits the AUD's upward potential. Market participants now focus on upcoming US economic data, including the Institute for Supply Management (ISM) Manufacturing PMI for August and the Job Openings and Labor Turnover Survey (JOLTS) for July, both released on Tuesday at 14:00 GMT.
Australian investors will also be watching second-quarter GDP data on Wednesday, which may offer additional clues about the Australian economy's growth trajectory and inform Reserve Bank of Australia (RBA) policy decisions.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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