AUD/USD Regains Lost Ground Beneath 0.6350 In The Wake Of Australian PMI Data

During the early Asian session on Tuesday, the AUD/USD pair posts modest gains below the mid-0.6300s. The correction in the yields on US Treasury bonds and the US dollar (USD) provides support for the pair's recovery. Presently, the pair is trading near 0.6336, an increase of 0.02% for the day.

With that being stated, the preceding session centred on the Treasury market. For the first time since 2007, the yield on 10-year Treasury notes peaked at 5.02% before reversing course and declining to 4.83%. This causes the USD to experience some selling pressure. In the interim, the US Dollar Index (DXY) declined to its lowest level in one month, 105.60.

The Chicago Fed National Activity Index indicates that a recession is still a considerable distance off. From -0.22 in August to +0.02 in September, the value increased. An index value of zero signifies that economic growth is conforming to the trend. An index value of zero indicates that the present rate of economic expansion is sustained.

The blackout period of the Federal Open Market Committee (FOMC) commences. Raphael Bostic, president of the Atlanta Federal Reserve (Fed), stated on Friday that he does not anticipate a rate reduction by the United States central bank before the middle of the following year. Fed Patrick Harker, president of Philadelphia, reaffirmed his inclination to maintain unaltered interest rates. The Federal Reserve Bank of Cleveland, according to Fed President Loretta Mester, is "at or near the peak of the rate hike cycle." The markets do not perceive a November rate hike as probable, per the CME FedWatch Tool; however, the likelihood of one occurring in January 2024 remains greater than 30%.

The preliminary S&P Global Composite PMI for Australia for October decreased from 51.5 to 47.3. In contrast, the Manufacturing PMI declined to 48.0 from 48.7 the previous month, and the Services PMI reentered contraction with a decrease to 47.6 from 51.8 the previous month. A further policy tightening by the Reserve Bank of Australia (RBA) was anticipated by the markets. Governor of the RBA Michele Bullock stated that the RBA would implement suitable policy measures if inflation continued to exceed projections.

Traders will now intently monitor the S&P Global PMI for the United States, which is released on Tuesday. The monthly and quarterly Australian Consumer Price Index (CPI) figures are scheduled for release later this week. The provisional estimate of the United States Gross Domestic Product for the third quarter is scheduled for Thursday, concurrent with a speech by RBA Governor Michele Bullock. The Core Personal Consumption Expenditure Index is scheduled for release on Friday. The absence of speeches by Fed officials this week is a consequence of the embargo period preceding the FOMC meeting the subsequent week.