**AUD/USD Dips Ahead of Australian PMI Release as RBA Maintains Cautious Tone on Inflation**
*Adapted and expanded from an article by FXStreet’s Anil Panchal, with further context and detail included.*
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The Australian dollar (AUD) lost ground against the US dollar (USD) in recent trading, edging down as investors awaited the upcoming release of Australia’s Purchasing Managers’ Index (PMI) data. The retreat comes in the context of the Reserve Bank of Australia’s (RBA) continued cautious stance on inflation risks, while global sentiment remains sensitive to US economic data and the Federal Reserve’s policy outlook.
**Key Points:**
– AUD/USD slipped below the 0.6550 mark, reflecting increased downside pressure
– Investors awaited fresh signals from Australia’s May PMI data to be released Friday
– The RBA warned inflation may stay higher for longer due to persistent domestic and global cost pressures
– Weak US jobless claims and housing data weighed on the US dollar, curbing its advances
– Traders remained on guard ahead of the Federal Reserve’s decision and US PMI data
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### AUD/USD Weakens as Traders Await Australian PMI Data
The Australian dollar drifted lower, falling to a two-week low under the 0.6550 level against its US rival during Thursday’s session. This retreat followed a combination of weaker risk appetite in global markets and a continued lack of strong domestic economic drivers for the Aussie.
Market participants were cautious ahead of closely watched Australian PMI reports set for release on Friday. These data points, covering both the manufacturing and services sectors, are considered leading indicators of economic activity. The PMI numbers will provide a fresh reading on the health of Australia’s economy and could influence the RBA’s near-term policy decisions.
#### Why the PMIs Matter
– Purchasing Managers’ Index readings above 50 signal expansion; below 50, contraction
– PMI data are used by investors, economists, and policymakers to gauge business sentiment
– Strong PMI figures can support the Australian dollar by indicating robust economic activity
– Weak or contracting PMI numbers add to concerns over slowing growth, often weighing on AUD
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### Background: The Reserve Bank of Australia’s Cautious Policy Stance
Earlier this week, minutes from the RBA’s policy meeting revealed a more cautious stance than some traders had anticipated. Policymakers expressed ongoing concern that inflation might remain stubbornly high, even as the economy slows and the labor market loosens.
The RBA left its cash rate on hold at 4.35 percent at the June meeting. While some market observers speculated this could mark a pause ahead of eventual rate cuts, the bank signaled it might need to tighten monetary policy further if inflation proves more persistent.
#### Key Excerpts from the RBA Minutes
– Board members discussed concerns that domestic price pressures, particularly in the services sector, remained elevated
– The central bank warned that waning productivity growth and strong wage pressures could prevent inflation from falling
Read more on AUD/USD trading.