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AUD/USD trades on a negative note amid the quiet session in the first trading day of 2024.
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December’s Australian Judo Bank final Manufacturing PMI arrived at 47.6 from the flash reading of 47.8, weaker than expected.
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The US Chicago PMI came in at 46.9 in December vs. 55.8 prior, below the market consensus.
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Traders will monitor December’s US S&P Global Manufacturing PMI, due on Tuesday.
The AUD/USD pair drifts lower on the first trading day in 2024 during the early Asian session on Tuesday. The markets remain quiet in the first week of the year. The pair currently trades around 0.6808, losing 0.04% on the day.
On Tuesday, the Australian Judo Bank final manufacturing PMI for December 2023 came in at 47.6 from a flash reading of 47.8, weaker than expectations of 47.7. The December manufacturing output index backed off to a historically low reading of 45.5. The report suggests that Australia’s manufacturing sector has shown a consistent easing trend through 2023, responding to monetary policy, with inflation in line with the RBA’s target levels. Activity in the sector is gradually declining, and we estimate this trend to continue into early 2024.
Moreover, China’s National Bureau of Statistics (NBS) reported on Sunday that the NBS Manufacturing Purchasing Managers’ Index (PMI) came in at 49.0 in December versus 49.4 previously, below the consensus of 49.5 in November. The NBS non-manufacturing PMI rose to 50.4 in December from the previous reading of 50.2, weaker than expectations of 50.5.
On the USD front, the Chicago PMI fell to 46.9 in December from 55.8 in November, below the market consensus of 51.0. At the December 2023 Federal Reserve (Fed) meeting, the Fed delivered dovish comments and investors priced in three rate cuts in 2024. According to WIRP, markets are pricing in a 15% chance of a rate cut on January 31 and January 31 priced around March 20. This, in turn, puts some selling pressure on the US Dollar (USD) and acts as a tailwind for the AUD/USD pair.
Looking ahead, December’s US S&P Global Manufacturing PMI will be released on Tuesday. On Wednesday, the Federal Open Market Committee (FOMC) minutes will be a closely watched event. The Fed’s Birkin is set to speak on Wednesday and Friday, and Logan is scheduled to speak on Saturday.
AUD/USD
