AUD/USD remains on the defensive around 0.6500, eyes on US PMI data
- AUD/USD weakens near 0.6505 in Monday’s early Asian session.
- US Nonfarm Payrolls missed expectations; Unemployment Rate rose in July.
- Traders adjust the odds of the RBA's rate cuts in 2024.
The AUD/USD pair trades on a weaker note around 0.6505 during the early Asian session on Monday. The downbeat Australia's Judo Bank Services Purchasing Managers Index (PMI) weighs on the Aussie. Investors await the US ISM Services PMI ahead of the Reserve Bank of Australia (RBA) interest rate decision on Tuesday.
Dada released on Friday showed that the US Nonfarm Payrolls (NFP) increased by 114K in July from the previous month of 179K (revised down from 206K). This figure came in weaker than the expectation of 175K, according to the US Bureau of Labor Statistics (BLS).
Meanwhile, the US Unemployment Rate rose to 4.3% in July from 4.1% in June, the highest level since November 2021. The Average Hourly Earnings eased to 0.2% month-over-month in the same reported period, below the market consensus of 0.3%. On an annual basis, the figure decreased to 3.6% from the previous reading of 3.8%.
The weaker-than-expected US employment data on Friday, along with the dismal ISM Manufacturing PMI report on Thursday, have fuelled the expectation that the US Federal Reserve (Fed) would cut its interest rate in September. This, in turn, might exert some selling pressure on the US Dollar (USD) in the near term.
On the Aussie front, the upside of the Aussie Dollar (AUD) is limited by diminishing expectations for another rate hike by the RBA at its policy meeting on Tuesday. Traders have priced in nearly 80% odds of an RBA rate cut by year-end.
The latest data by Judo Bank and S&P Global on Monday revealed that the final reading of Australia's Judo Bank Services PMI dropped to 50.4 in July, This figure was below the consensus and the previous reading of 50.8. The Composite PMI declined to 49.9 in July versus 50.2 prior.
