Aussie dollar under pressure after weak China PMI while traders look to GDP release
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Daily Currency Update
The Australian dollar is holding close to US$0.6540 at the time of writing, with the AUD/USD pair currently in consolidation mode. While the movement appears relatively calm on the surface, the broader picture shows the Australian dollar struggling to gain momentum. This comes as the US dollar continues to soften, recently touching a two-week low. Ordinarily, a weaker USD would offer the Aussie some breathing room, but this time, the AUD has not been able to fully capitalise, signalling that it is underperforming compared with other major currencies.One of the key factors weighing on the AUD is the latest set of economic data out of China, Australia’s largest trading partner and a vital driver of demand for commodities, exports and overall economic activity. China’s RatingDog Manufacturing PMI for November came in below expectations, landing at 49.9. Markets had been looking for a reading closer to 50.5, which would have indicated modest expansion, and the previous month’s figure stood at 50.6. Instead, the unexpected dip below the 50.0 threshold suggests that manufacturing activity contracted during the month.
Because Australia’s economy is closely tied to Chinese industrial performance, especially sectors such as mining, metals and energy, any sign of weakness tends to translate into softness in the AUD. Despite these headwinds, local traders and international investors will be turning their attention to a major domestic event this week: the release of Australia’s third-quarter Gross Domestic Product (GDP) figures. Scheduled for Wednesday, this report is expected to provide a clearer snapshot of the economy’s momentum amid changing global conditions and shifting expectations around monetary policy.
Forecasts from the Australian Bureau of Statistics point to growth of around 0.7% for the third quarter, an improvement from the 0.6% expansion recorded in the previous quarter. While the uptick may seem modest, even small improvements can help bolster confidence, particularly in an environment where many economies are grappling with slowdowns, inflation pressures and uncertainty around interest rate paths. A stronger-than-expected GDP print would likely support the AUD, at least in the short term, by reinforcing the view that the economy is holding up relatively well.
However, if the data comes in weaker than anticipated, the AUD could face renewed pressure, especially with global markets still sensitive to economic indicators and central-bank guidance. For now, traders will be watching both international developments and domestic data releases closely as they navigate what remains a cautious and headline-driven currency environment.
Key Movers
The US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, is trading around 0.2% lower near 99.25 at the time of writing. The softer tone reflects ongoing pressure on the USD, as investors continue to factor in the growing likelihood of a Federal Reserve rate cut in December. Market pricing now suggests an over 80% chance of a 25-basis-point reduction, reinforcing the view that US monetary policy is gradually transitioning from a restrictive stance toward an easing cycle.This shift in expectations comes as traders digest a mixed set of US economic indicators released on Monday. The latest update from the Institute for Supply Management (ISM) showed a sharper-than-anticipated deterioration in the manufacturing sector. The ISM Manufacturing PMI slipped to 48.2 in November, down from 48.7 in October and below the consensus forecast of 48.6. A reading below 50 signals contraction, and the details of the report painted a similarly cautious picture. The New Orders Index fell to 47.4, marking its third straight month of decline, suggesting demand conditions remain subdued.
Meanwhile, the Employment Index dropped to 44, indicating weakening momentum in manufacturing-sector hiring. The only component showing any strength was the Prices Paid Index, which rose to 58.5, hinting at persistent cost pressures even as broader activity softens. For policymakers weighing inflation risks against economic cooling, this mix of signals adds another layer of complexity. However, the story was not entirely negative. A separate reading from S&P Global offered a more upbeat perspective on the sector. Its US Manufacturing PMI ticked up to 52.2, compared with the preliminary estimate of 51.9, marking a fourth consecutive month of expansion.
According to the survey, production continued to rise at a steady pace, and employment also registered another increase. Still, the report noted softer growth in new orders and a fifth straight monthly decline in export sales, suggesting that external demand remains a weak spot. The contrasting outcomes between the ISM and S&P Global surveys have left analysts and investors with a somewhat blurred view of the true underlying health of US manufacturing. Such divergences are not uncommon, each survey relies on a different sample group and methodology, but the gap this month underscores the broader uncertainty surrounding the economic outlook.
For now, the market’s focus remains firmly on the Fed’s upcoming policy meeting. With signs of slowing activity but lingering price pressures, the central bank faces a delicate balance. Until the picture becomes clearer, the US dollar is likely to stay sensitive to incoming data and shifts in rate-cut expectations.
Expected Ranges
- AUD/USD: 0.6450 - 0.6650 ▲
- AUD/EUR: 0.5550 - 0.5750 ▲
- GBP/AUD: 2.0100 - 2.0300 ▼
- AUD/NZD: 1.1300 - 1.1500 ▼
- AUD/CAD: 0.9050 - 0.9250 ▲