**Australian Dollar Holds Steady Around 0.6600 Amid Weakening US Dollar and Disappointing Economic Data**
*Adapted and expanded from VT Markets, June 2024*
The Australian dollar (AUD) continues to find firm footing near the 0.6600 level against the US dollar (USD). This stability is occurring as the greenback faces downward pressure in global markets, influenced by softer-than-expected US economic data and the anticipation of upcoming US inflation figures. The interplay between subdued economic momentum in the United States and persistent soft data from Australia is shaping forex market sentiment, keeping the AUD/USD within a relatively narrow range.
Below is an in-depth analysis of the major factors influencing the AUD/USD pair, drawing from the original analysis by VT Markets and additional recent sources, including data from the Australian Bureau of Statistics and global financial analysis.
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## Recent Performance of the Australian Dollar
– **Trading Range**: The AUD/USD has seen little significant movement, with the pair maintaining a range close to 0.6600.
– **Market Sentiment**: Traders remain cautious, awaiting clearer direction from fundamental data releases in both countries.
– **Volatility**: Recent sessions have shown subdued volatility, with the market responding moderately to macroeconomic news.
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## The US Economic Backdrop
### Weak US Dollar
The US dollar has recently softened against most major currencies. Several contributing factors include:
– **US PMI Figures**: The latest US S&P Global Purchasing Managers’ Index (PMI) indicated a slower pace of expansion in both manufacturing and services. The composite PMI slipped from 54.5 to 54.2 in May, signaling that growth momentum may be losing steam.
– **Labor Market Signals**: While the US labor market remains fundamentally strong, headline job growth has plateaued, and wage gains are flattening out. Recent initial jobless claims edged higher, hinting at a possible moderation in labor demand.
– **Federal Reserve Policy Outlook**: Last week, the Fed signaled its intention to keep interest rates higher for longer, aligning with its data-dependent approach. Still, softer data opens up renewed debate over whether rate reductions could materialize sooner than previously anticipated.
– **US Treasury Yields**: Declining yields on benchmark US Treasury bonds have also contributed to dollar weakness.
– **Risk Sentiment**: With global markets upbeat about potential easing cycles, riskier assets like the AUD benefit as the USD loses its haven status.
#### Key Influences on the USD
– Lower-than-expected US employment and PMI figures
– Market belief that the Fed may have reached the peak of the current tightening cycle
– Expectations of easing inflation in upcoming US consumer price index (CPI) data
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## Australian Economic Landscape
### Domestic Data Remains Subdued
Australia has seen a run of data that underscores the economy’s fragile state. Key takeaways include:
– **PMI Figures**: Australia’s own PMI numbers, while not
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